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Everything Landlords Need to Know During the Coronavirus Lockdown

The government is working on a wide range of measures to support businesses, the employed and the self-employed through the Coronavirus pandemic. The pandemic has fundamentally changed the way we live as country after country has been forced to go into ‘lockdown’ to slow down the effects of the disease, delay the peak and prevent as many deaths as possible.

The UK’s lockdown is more relaxed than many of its European and Asian counterparts, however, it is still very restrictive in the fact that it prevents the public going outside for all but essential reasons, such as to buy food, visit the doctors or take daily exercise. The British public has also been instructed to practice ‘social distancing’ keeping two metres away from people not from our own households, even if they are family members or friends.

On Friday 20 March the government reluctantly closed schools, then on 23 March, it stepped up measures to prevent the spread of coronavirus by closing businesses responsible for many of our everyday physical interactions. These measures hit the catering, hospitality and leisure industries hard. Workers were also urged to work from home unless they absolutely were not able to carry out their duties from home.

The property industry has, unsurprisingly, been affected by subsequent lockdown measures. The industry was only just recovering from three years of Brexit uncertainty when Coronavirus reared its ugly head. Without outright banning property transactions, the government has effectively stalled the property market by urging buyers and sellers to delay their completion and moving days, while lenders have agreed to offer mortgage offer extensions to those affected by COVID-19 so that they have longer to complete their property transactions. Business Secretary, Alok Sharma, said: “People will understand that at this time they should, where it’s at all possible, move their dates for completion but also their dates moving into new homes.”

The Coronavirus Act 2020 – Landlords and Tenants

All of the emergency measures above form part of the Coronavirus Act 2020, a 329-page bill that gives draconian emergency powers to the government, healthcare providers, councils and police in order to manage the outbreak.

Among the Act’s plethora of emergency powers, is a measure that provides immediate protection to renters, including those who may be struggling to pay rent, meaning that until 30 September 2020, landlords are not able to start possession proceedings unless they have given their tenants three-months’ notice – this notice period has been extended from two months. Furthermore, current housing possession court cases have been suspended for the 90-day period starting 27 March 2020.


What if the property I rent out needs a repair?

Despite the global pandemic, landlords’ repair obligations have not changed. Tenants have a right to a decent, warm and safe place to live. It is therefore in the best interests of both tenants and landlords to ensure that properties are kept in good repair and safe for their occupants during the lockdown.

Good property management usually requires regular property visits and maintenance, however, due to new, self-isolation rules landlords may need to rely more heavily on their tenants to keep them informed of any faults. It is therefore advisable for your tenants to be made aware of this responsibility and also request that they be prepared to allow landlords or contractors access to their rental property in order to remedy urgent health and safety issues or allow gas safety certificates to be issued, if this can be done safely, of course.

Basically, in these unprecedented times, tenants and landlords should work together forming a common-sense approach to their relationship.

And no matter what kind of rental property you own, the Government has made it clear that nobody can be removed from their property if they are suffering from the virus, nor are landlords obliged to provide alternative accommodation for tenants if others in the property contract the virus. Occupants should just be directed to NHS guidance on self-isolating.


What about mortgage repayments?

Mortgage lenders have agreed to offer payment holidays of up to three months where this is needed due to Coronavirus-related hardship. These payment holidays are also available for buy-to-let mortgages. Landlords should be able to access mortgage holidays if they are currently up to date with their mortgage payments and they or their tenant have been financially affected by the pandemic.

Robert Jenrick, Secretary of State for Housing, Communities and Local Government, said: “The government is clear – no renter who has lost income due to coronavirus will be forced out of their home, nor will any landlord face unmanageable debts.”

Landlords taking advantage of a mortgage holiday should firstly doublecheck that their credit rating won’t be affected if they take a mortgage holiday (this should be the case during the pandemic). They should also be aware that the holiday is not free money; the sum owed will likely increase and their mortgage will continue to accrue interest during this non-payment period. Lenders may also require this deferred payment to be spread across future mortgage payments rather than becoming payable at the end of the mortgage term, so do make sure you know your lender’s mortgage holiday terms and conditions and make sure you can afford payments if you do have to spread the cost of the deferred payments over the few months following the holiday.


What other help is there for landlords?

Of course, a mortgage holiday doesn’t help landlords who don’t have a mortgage on their buy-to-let property. So what other assistance is there out there? We take a look.


Deferring VAT and self-assessment payments

If you’re a UK VAT registered business and have a VAT payment due between 20 March 2020 and 30 June 2020, you have the option to:

If you’re due to pay a self-assessment payment on account by 31 July 2020 but the impact of the coronavirus causes you difficulty in making payment by that date, you can defer payment until January 2021 by either logging into your online HMRC account selecting the option to view your latest self-assessment return and clicking ‘Reduce payments on account’ or by completing the SA303 postal form.

 

Time to Pay Scheme (taxpayers)

If you’re in temporary financial distress because of COVID-19 more help is available from HMRC’s Time to Pay scheme. All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.

These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.

If you have missed a tax payment or you might miss your next payment due to COVID-19, you should call HMRC’s dedicated helpline: 0800 024 1222.

 

Support for self-employed through the Self-employment Income Support Scheme

The Self-Employment Income Support Scheme (SEISS) has been designed to support self-employed individuals (including members of partnerships) who have lost income due to coronavirus (COVID-19).

This scheme will allow you to claim a taxable grant worth 80 per cent of your trading profits up to a maximum of £2,500 per month for the next three months.

There are some clearly defined eligibility criteria including the fact that over 50 per cent of your earnings must come from self-employment, you must also have filed your 2018-19 tax return and your self-employed trading profits are less than £50,000 per annum.

Frustratingly, unlike the employed furlough scheme you cannot apply for the SEISS scheme yet. In fact, the Chancellor of the Exchequer says the self-employed may have to wait until June for this 3-month lump sum payment. We understand that HMRC will contact you if you are eligible for the scheme and invite you to apply online once available.

Alternatively, if you’re a director of your own company and paid through PAYE you may be able to get support using the Job Retention Scheme.

Financial guru Martin Lewis clearly explains your self-employment rights and what earnings a director of a limited company can claim in his video:

 

Support for businesses through the Coronavirus Business Interruption Loan Scheme

If you can’t wait for your SEISS payment until June, the Coronavirus Business Interruption Loan Scheme supports SMEs with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to six years. The government has also said it can also pay a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses benefit from no upfront costs and lower initial repayments. There are 40 accredited lenders able to offer the scheme, including all the major banks.

However, although the government has said it will provide lenders with a guarantee of 80 per cent on each loan, people are finding it difficult to access the scheme without providing further guarantees, which defeats the point. We understand these issues will be ironed out by the Chancellor in the next few days.

 

Universal Credit

The government is also providing additional help for the self-employed in the form of Universal Credit. Universal Credit is a benefit payment for people in or out of work. It replaces some of the benefits and tax credits you might already be getting now, such as:

  • Housing Benefit.
  • Child Tax Credit.
  • Income Support.
  • Working Tax Credit.
  • Income-based Jobseeker’s Allowance.
  • Income-related Employment and Support Allowance.

You can check if you qualify here.

 

Council tax, banks and utilities help

The Government has also made new funding available to council’s to help provide support to residents who are experiencing hardship. Current recipients of Local Council Tax Support will automatically have a further reduction applied to their 2020/21 council tax bill. For anyone else experiencing difficulty in making payment, your council should be able to agree alternative arrangements with you. This may include rescheduling or delaying payment.

In addition to the government measures, banks have also introduced their own measures that you may be able to access e.g. some banks are allowing borrowers to increase credit card limits and access savings early with no additional fees. It may be worth checking with your bank to see what help they will offer you.

The Bank of England has also significantly lowered its base rate, which again may have a significant effect on your mortgage costs. Once again, do check with your lender for further information.

If you are struggling to pay any of your regular payments, the best thing would be to contact your supplier and explain the situation and ask what assistance might be available.

So, there is a multitude of measures to help landlords get through this difficult period. In return, all we are asked to ‘do the right thing’. Stay Home, Protect the NHS and Save Lives by following all Government guidance. Not much to ask, right?

Stay safe everyone!

 

 

 

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Alex Wright, Editor