The landlord rent crisis: Navigating a pandemic
As the cost of rent continues to rise across the UK during the coronavirus, tenants are increasingly struggling to keep up. Due to many commercial and residential tenants across the UK facing financial difficulties amid the COVID-19 Government-imposed lockdown, this has meant that despite this rise in rental premiums, landlords are receiving thousands less in rent and service charge payments each month.
On the 26th June, The Lettings Industry Council reported a sharp rise in rental arrears, revealing that £3m had built up over lockdown, with almost 2,500 eviction cases waiting to go through the courts. The Council told The Telegraph that the average amount owed at that time to landlords with tenants in arrears was approximately £1,250.
Tenant Eviction Ban
Early in June 2020, the Government extended their eviction ban by two months for both England and Wales. This means that no tenant can be evicted in the summer months and eviction hearings will not be brought to court until the end of August. While this is positive news for tenants who have been financially impacted by the coronavirus, it also enables previously unreliable tenants to slip through the net, meaning that landlords are losing money in the meantime.
It’s predicted that thousands of tenants who are behind in their rent payments due to COVID-19 will be evicted from their homes in August unless the Government steps in to help. Even when ‘normal life’ starts to resume, the UK will still be facing the aftermath with some experts predicting one of the worst recessions we will see in our lifetime.
Chief executive of Homelessness Charity Crisis, Jon Sparkes, said: “It’s deeply concerning that renters are at risk of losing their homes because of the huge and sudden pressure coronavirus has exerted onto their lives.
“Right now, many people are facing agonising stress and anxiety because they cannot pay their rent as, through no fault of their own, their job has been lost or their hours have been cut. This is made all the worse when we know that many thousands of renters are at risk of homelessness once the suspension on evictions comes to an end next month.
“It’s vital that we now focus our attention on ensuring that everyone has a safe and affordable home during this outbreak and beyond. That’s why we need the government to immediately bring forward emergency homelessness legislation to suspend the benefit cap and put in place emergency legal protections so that no one is unfairly evicted because of the pandemic.”
Building up arrears
Unfortunately, no matter how lenient a landlord is toward their tenant during periods of financial difficulty, rent arrears will continue to escalate and these need to be paid back at some point. This has sparked concerns that as COVID-19 risks begin to ease and lockdown measures continue to relax, a new crisis will take place for those left with excessive debts to pay. It is hoped that the Government will continue to support both commercial and residential tenants financially post-pandemic in order to ease their way back into a solid financial position.
Commercial Code of practice
In an attempt to provide some clarity and guidance for commercial landlords and their tenants. the Government has published a voluntary Code of Practice for Commercial Property. The purpose of this is to strengthen the relationship between landlord and tenants while they may be tackling financial difficulties over the pandemic.
To avoid getting into a position of excessive arrears, the current guidance suggests that if a tenant can afford to pay their rent, they should continue doing so. In cases where tenants absolutely cannot afford to pay, it encourages landlords to remain flexible and support their tenant during these testing times.
Communication between the two parties is vital over this period and the code advises that all conversations and requests should remain open and transparent, supplemented by documentary evidence where appropriate. In order for a tenant to achieve the outcome they want, they need to be clear with the landlord as to what the desired outcome is, why it’s necessary and how the back payment will eventually be cleared.
Reviewing your Landlord Insurance
If you’re looking to make a claim on your Landlord or Property Owners’ Insurance or you want to review the terms and conditions of your policy, the team at Lockyers can help. We’re happy to take a look at your cover and advise you of any gaps or exclusions you may not be aware of. We can also look at ways you can strengthen your cover for the future. To speak to a member of the team, just call us on 01924 278222.