The impact of COVID-19 could adversely affect both tenants and landlords. We examine what help the government is giving to both of these groups of individuals.
In this ever changing environment, the government has announced plans to support Tenants and Landlords whose income is being affected by COVID-19.
In legislation that was rushed through parliament before the house rose on Wednesday 25 March, and is now part of the Coronavirus Act 2020, private tenants cannot be evicted for at least three months even if they are struggling with their rent. In addition, landlords have been urged “to show compassion” and allow affected tenants to remain in their homes “wherever possible”. Landlords are still permitted to start eviction proceedings but they must give their tenants at least three months notice. This legislation will cover the period from now until 30 September 2020.
So what will landlords do if they stop receiving rent and cannot evict their tenants?
The Chancellor of the Exchequer has announced that banks will give “payment holidays” of up to three months from paying their mortgage. The unpaid interest will, however, need to be paid later, although individual credit ratings will not be affected. The government has confirmed that the repayment holiday will be extended to landlords.
If, as a landlord, you become financially impacted by the non-payment of your tenants through coronavirus related circumstances, we strongly recommend that you speak to your lender. You could consider where applicable, changing from a repayment mortgage to an interest only mortgage or requesting a payment holiday. This is unlikely to happen immediately and may take a period of time for mortgage companies to catch up with this imminent change once passed.
Please note that interest will continue to be calculated over the payment holiday and will be added to the loan amount. Ultimately you could see your monthly amount adjusted accordingly after the payment holiday.
What about commercial property?
Commercial tenants who cannot pay their rent because of COVID-19 will also be protected from eviction as mentioned in the Coronavirus Act 2020.
These measures will mean no business will automatically forfeit their lease and be forced out of their premises if they miss a payment up until 30 June. There is the option for the government to extend this period if needed.
This is not a rental holiday. All commercial tenants will still be liable for the rent.
If you have any questions or queries please do not hesitate in contacting Jan or Darren in our tax department.
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The content in this blog is correct as at 27 March 2020 See terms and conditions.