The Government has announced a raft of measures to support landlords and tenants through the coronavirus emergency. Things are moving very quickly and this guide will be regularly updated as more details emerge.
- Emergency legislation to suspend new evictions from social or private rented accommodation while this national emergency is taking place
- No new possession proceedings through applications to the court to start during the crisis
- Landlords will be expected to work with tenants to create payment plans for unpaid rent
- Landlords will also be protected as 3 month mortgage payment holiday is extended to Buy to Let mortgages
- OpenRent launch ‘pause’ function for rent collection
Complete Ban on Evictions in England and Wales
No new possession proceedings will be permitted to courts “during the crisis”, which we take to mean until the emergency is declared to be over. Details are still emerging as the measures will be enacted via emergency legislation, a draft of which has not yet been published. The bill will probably be rushed through Parliament without debate in the coming days.
It is not known what will happen to possession proceedings already underway. The courts are currently still sitting as usual, but are coming under strong pressure to close or adapt their practices to reduce human contact and to prevent tenants at risk of eviction also being required to attend a busy court and risk infection, too.
Measures have also been announced in Scotland. Usually, renters must be in arrears for three consecutive months in order for courts to treat this as a mandatory basis for eviction under Ground 17. This is being extended to six months. First Minister Nicola Sturgeon has warned that “no one should face eviction because of rent arrears accrued as a result of the coronavirus.”
Three-Month Mortgage Holiday for Landlords
On 17 March, the Government announced that lenders would be offering owner-occupiers affected by the virus a mortgage payment holiday of up to three months. On 18 March, these measures were extended to buy-to-let mortgages where tenants are experiencing financial difficulties due to coronavirus.
That means that landlords whose tenants are in financial difficulty caused by the virus can contact their lender and arrange to suspend all mortgage payments, for both their own home, and any buy-to-let properties they own, for three months. It is thought that the payments will be added to the end of the existing mortgage term, so that a 25-year mortgage would become a 25-year-and-three-month mortgage. It is understood that interest will continue to accrue at normal rates over the three-month holiday period.
How Will Mortgage Holidays Work?
Landlords will be expected to contact lenders to arrange the postponement of mortgage payments. Lenders have agreed with the Government to offer this to mortgagors.
One important question is whether landlords will be required to stop collecting rent if they are in receipt of a buy-to-let mortgage holiday. It does not look like they will be required to. Rather, it looks like the Government is relying on landlords and tenants to negotiate their own arrangements against the backdrop of the new measures.
The Government has promised to “issue guidance which asks landlords to show compassion and to allow tenants who are affected by this to remain in their homes wherever possible”. This sounds like voluntary arrangements to us, but backed up by the very real point that evictions will not be possible anyway, so landlords’ usual last resort will not be available.
The Government thinks the mortgage holiday “will mean no unnecessary pressure is put on their tenants as a result”. In addition, “landlords and tenants will be expected to work together to establish an affordable repayment plan” at the end of the mortgage holiday period, “taking into account tenants’ individual circumstances”.
This seems like an admission that many landlords will be expected to bear their share of the short-term financial squeeze at a time when people across all sectors are facing falls in their income.
Finally, it is not expected that landlords will have to prove that they or their tenants are effected by the virus in order to receive the mortgage holiday from their lender. We have asked the Ministy for Housing Communities and Local Government for more clarification on this point, but more information will only be available once the emergency legislation is published.
There have also been announcements that will affect landlords letting to tenants who claim benefits, or have recently lost their income. People affected by the virus will be able to apply for emergency Universal Credit and receive up to a month’s payment up front. The money can be accessed without physically attending a job centre.
The upfront money would be a loan paid back over 12 months. A hardship fund is also available for tenants unable to pay rent, bills, and other essential costs like white goods.
We’re working hard to support users.
We know that many landlords will have tenants who are affected by coronavirus and who want to be sensitive to their situation. This means landlords may wish to stop chasing tenants for the rent for the next few months.
We’ve made this easy to do by adding a ‘pause’ feature to our rent collection service. Once activated, the pause will stop tenants being chased for rental payments, while automatically keeping track of however much rent they do pay. That will make it easy to work out repayment plans later, or to know how much rent has been forgone as part of any agreement between tenant and landlord.
You’re Not Alone
We’re continuing to offer tenants and landlords the same support as always. As an online service, we’re very well placed to continue to help. If you need assistance with your tenancy or property listing, email to the team as usual on firstname.lastname@example.org and we’ll get back to you in one working day.
Landlords from all over the country are taking to our OpenRent Community forum to share how coronavirus is affecting them and their tenants. The Community is a fantastic resource for landlords and tenants to connect and receive support.