Given the lockdown measures being extended by the Government for at least a further 3 weeks, landlords need to be aware of the changes made by the Government in relation to the COVID-19 pandemic and what it means for them.
The situation is changing rapidly – with further announcements expected shortly – Redwood Accountants will continue to monitor the situation and provide updates as more information becomes available.
Regardless of whether you are a residential landlord or a commercial landlord, it’s likely that your tenants will be affected by the COVID-19 pandemic in some way, shape or form. Landlords letting holiday homes and apartments will almost certainly experience a decline in demand during the nationwide lockdown, while commercial landlords may experience businesses struggling to pay their rents due to a drastic decline in income.
Fortunately, the UK Government is taking unprecedented steps to try and soften the economic blow and give all parties a fair and reasonable outcome.
Mortgage Holidays For Landlords
Buy-to-let mortgage lenders are committing to offering landlords a mortgage holiday of up to three months for private landlords whose tenants have been impacted by COVID-19. This holiday is provided on the basis that landlords offer similar rent holidays to their tenants to give them much-needed financial breathing space too.
At the end of the three-month window, landlords and tenants alike will be required to work together to establish an affordable repayment plan, covering the cost of additional interest incurred during the mortgage holiday.
Tenants will still be liable for their rent and should pay this as usual. If they face financial hardship and struggle to pay, support is available through various Government schemes.
In the first instance they should speak to you, as their landlord, if they think they will have difficulty meeting a rental payment, and we would suggest tenants and landlords work together to come to a mutually acceptable arrangement.
It is important to open dialogue as soon as possible where it is likely a rental payment could be missed.
Landlords are not required to stop charging rent. However, the Governments of England, Scotland and Wales have announced emergency legislation to ban evictions, with Northern Ireland expected to follow.
Landlords should also ensure that they are aware of their legal obligations. The Government has produced guidance for landlords and tenants that can be viewed here.
As of 26th March 2020, the Coronavirus Act 2020 stipulates that residential property landlords must give tenants a minimum of three months’ notice if they intend to seek repossession of the property. Landlords cannot apply to begin court proceedings until after this three-month window.
Furthermore, this three-month ‘buffer’ period will remain applicable in law until 30th September 2020 at the very earliest. The Act also stipulates that this date and the three-month notice period can be extended if necessary. While the Coronavirus Act 2020 applies initially only to residential property it may be expanded to include commercial buildings at a later date.
Eviction Notice Periods
Any payments on account towards Income Tax for the 2019/20 tax year, which would have been due for payment by the end of July 2020, have been deferred until the end of January 2021. This is an automatic process and does not need to be applied for.
In addition to this the Government has enhanced the HMRC’s ‘Time to Pay’ arrangement scheme to help those with upcoming tax bills plan how they can pay with an individual plan. To support this, it has also launched a dedicated helpline – 0800 0159 559 – with increased staff numbers, to help those who are concerned about being able to pay their tax due to coronavirus.