COVID-19 has disrupted what we viewed as usual. Businesses are closed while thousands of UK residents have lost their jobs. And there isn’t a tougher time to be a landlord than now. Your tenants are probably having a hard time affording rent, and this could continue for a few more months.
As a compassionate landlord, you would want to be kind enough and waiver rent for your struggling tenants. But, this may not be feasible since you also need the money to make your mortgage payments, maintain the property, and pay your insurance premiums. The UK government has provided protection against evictions for tenants who miss their rent payments during this pandemic period, but that doesn’t mean you have to suffer. Here are some top tips for landlords trying to collect rent during COVID-19.
Keep communication lines open
Tenants are required to communicate with their landlords if they are unable to pay rent. Ensure that tenants can easily reach you and be ready to give a listening ear when they contact you. It will not be unreasonable to ask for verification in the case a tenant claims that they can’t pay rent. This ensures you help the tenants who have a genuine need and aren’t taken advantage of.
Set up rent payment plans
If you don’t have a rent guarantee in place, consider setting up payment plans for tenants who may have difficulties affording rent. You can also provide flexible rent payment options. Here are some suggestions that can help:
Allowing your tenants to pay rent monthly rather than quarterly.
Allow your renters to pay in arrears rather than in advance.
Waiver late rent fees.
Allow renters to pay what they can and spread the arrears over 3 to 6 months once the crisis is over.
Drawing on your tenant’s original deposit rather than collecting rent.
Consider other available support for your tenants
You should keep up to date with the help and advice given to landlords and tenants by the UK government. You can support your tenants who may be worried over their inability to pay rent in the coming months by pointing them in the right direction.
Tenants who are concerned with their inability to pay rent can seek help from the Department for work and pension, which can offer them universal credit if they are eligible. Tenants can also apply for Discretionary Housing Payment. The Scottish Welfare Fund is also providing emergency help for low-income earners in Scotland.
Allow for digital payments
If you usually accept cash or cheque as a rental payment, now is the time to switch to digital payments. Many online letting agents use digital payment request features that allow tenants to use credit or debit cards, which is perfect for tenants who may not have cash at hand or for those who may have difficulties sending you a cheque. Digital payment options also encourage social distancing as your tenant doesn’t have to meet you in person. Other benefits of digital rent payments include:
Auto-payments – The payment request tool allows for recurring payments ensuring you get your rent on time
Improved visibility – If you have numerous tenants, a digital payment option can help you keep tabs on who has paid and who hasn’t
Rent reminders – The online payment toolsets reminders to your tenants ensuring they pay their rent on time
Streamlined payments – Your tenants will find it easier to pay their rent at the comfort of their homes without the need to deposit checks or cash.
Better records – It’s easier for a digital rent tool to produce automatic receipts and copies you can retain for future reference.
Speak with your lender
If you’re worried that reduced rental income may see you default on your mortgage payments, you must talk to your lender about it. Let them know how much you can pay, considering your expenses and the lost rent from your property. So long as you are transparent, your lender may be willing to reach an understanding of what you can do to ensure you don’t default on your mortgage payments. Some lenders may be willing to accept reduced payments, while others may be willing to give you a lower interest loan that can cushion you until the crisis is over.
If you default on your mortgage payment without notice, this may be recorded as a missed or late payment and can adversely impact your future credit score.
Take advantage of the mortgage payment holiday
The UK government announced a three-month mortgage payment holiday for landlords struggling to make their buy to let loan payments due to the pandemic. Recently, this mortgage payment holiday was extended. Landlords with no mortgage arrears can apply for this payment holiday if they are facing financial hardships. Although lenders are expected to review each case individually when deciding if one qualifies for the payment holiday, experts argue it will be difficult for them to deny a lender their payment holiday request. The applicants requiring the mortgage holiday are many making it almost impossible for lenders to analyze each case individually before making a decision.
However, be advised that taking a mortgage payment holiday only defers your payments for a few months. Your missed payments will be added to your mortgage, increasing the amount and interest you will pay for the remaining part of your loan period.
These six tips will help you encourage your renters to keep up with their rent during the COVID-19 period. Don’t forget to keep checking on your tenants and letting them know you are available if they need you.