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COVID-19 and residential landlords: practical considerations

COVID-19 and residential landlords: practical considerations

Wednesday, 22 April 2020

The COVID-19 pandemic is touching all aspects of our lives. Even though the Government is providing comprehensive support through this difficult time, the personal financial circumstances of many will be dramatically affected by the crisis.

This poses a particular set of challenges to residential landlords, whose income is determined by their tenants’ ability to make rental payments. This may be particularly concerning because renters have been given enhanced protection against eviction. So what can be done if these tenants can’t or won’t pay?

Although this question is mainly a legal one, here are some practical tips which may help before it comes to this.

Honest and open communication with tenants is key. This is a difficult time for everyone and adopting an open-minded, proactive approach may help you and your tenants to understand each other’s situations and perspectives. This may allow you to agree a course of action that provides a way forward satisfactory to both parties.

Is it possible to reduce your expenses?

  • Homeowners and landlords can now apply for a three-month mortgage payment holiday by contacting their lender; many of whom have other supportive measures in place, such as payment holidays on personal loans and credit cards, and allowing early access to savings. Contact your lender to find out what support they may be able to offer.
  • Check the terms of your rental contracts and identify any expenses which your tenants are obliged to meet, perhaps council tax; the pandemic does not automatically relieve all legal obligations.
  • Consider which expenses are essential and whether some could be paused or stopped, perhaps maintenance contracts and other subscription services that you aren’t contractually obliged to sustain.
  • If you also have income subject to self-assessment, could you reduce your tax deductions with a change to your tax code?

If you or your tenants need temporary financial support throughout the duration of the crisis, make sure you understand what’s available. This is changing all the time, but consider:

  • Making use of government schemes to support incomes, such as the job retention scheme and the self-employed scheme (note that renting property on its own doesn’t qualify).
  • If you’re due to make a payment on account in respect of your personal tax or would be liable to HMRC for a VAT payment, read about your ability to defer that payment.
  • Can your tenants access universal credit or housing benefit? Although a landlord owning a rental property will be unlikely to have access to universal credit, depending on a tenant’s circumstances, they possibly will.

As always, if you need more help and advice regarding your rental situation, we suggest you speak to a legal or financial professional.

If you have any questions about your personal tax affairs, please get in touch with your usual contact at MHA Larking Gowen, or email enquiry@larking-gowen.co.uk

You can find contact details on the Our People section of the MHA Larking Gowen website.

Ed Millsted

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