Will Landlords Survive Covid-19?

 “God grant me the serenity to accept the things I cannot change, courage to change the things I can, and wisdom to know the difference”.  – Reinhold Niebuhr

When the crisis passes, and it will, we will all need to pick up the pieces and put our businesses back together.  There are some things that we can do to prevent unnecessary problems and some things which must be accepted but which we need to be aware of.  I have been renting property in England since 1972. I have survived 18% interest rates, properties trashed by tenants, huge rent arrears, changes in demand for different types of property, economic crashes, increases in competition, serious health issues, increased regulation and legislation ……. And I am going to survive Covid-19!

I would like to share with you some of the issues which need to be looked at and categorized:

• Do it now
• Plan for the future
• Accept and keep a watch

The first is to establish the status of your properties:

• Are the tenants still living there?
• Have the tenants moved away temporarily?
• Have the tenants moved out completely?

Contact all your tenants and ask if they are well, ask if they need you to do anything within the restrictions of movement in the Government directives. This should be enough for them to tell you if they have in fact moved out or not without needing a direct question – This is a Do It Now They may raise the issue of rent payments.

Take Necessary Action

Tenants are still living there – if at this point they tell you that they are worried about paying their rent because their financial circumstances have changed, help them to claim financial support, this is being offered to most people now. 

If you are asked to reduce the rent, you might want to discuss a deferred payment where they pay less (or none) now and catch up when things are back to normal. The reality is that we cannot legally evict a tenant now and therefore we have no other option than to work something out with them. File this under – Plan for the future and keep a close eye and keep good payment records.  Avoid accepting cash payments which could cause a dispute in future.

If your tenants are still living in the property and are paying their rent in full and on time – You have won the landlord lottery – wonderful.

They have moved away temporarily – Contact your insurance company and tell them that the property is unoccupied at the moment because of Covid-19.  They should allow you 30 days before asking for increase of premium for an empty property and/or giving instructions about heating, water etc. It appears that they haven’t caught up with the Government directive to “stay indoors unless you absolutely must go out” and some of them are asking for weekly inspections. I have asked NRLA to ask MHCLG to put pressure on the Insurance underwriters to be more flexible at this unprecedented time. Your Insurer or broker will tell you where you stand but it’s important that you tell them about the change of status of the property because if the worse happens and you haven’t told them you will not be insured. This is a – Do It Now.

Don’t put pressure on the tenants who have moved out for a while, they may be afraid or just want to be with their loved ones.  They may have moved quickly and didn’t think to turn off water etc. At this time of year this isn’t really a cause for concern – file this under – Accept and keep a watch  unless it causes you anxiety in which case be safe but take action to resolve the issue. Anxiety is, in itself, a problem at this time and may lead to mental health issues.  If you, your tenant or relative need support there is good advice here.

During this difficult time more people struggle with addiction, if you or anyone you know need help with this Rehab 4 Addiction is a great free helpline service for those in London and is run by people who are themselves in recovery from addiction.

Tenants have moved out completely – This is prevalent in HMO and especially in student houses. This one comes under – Do It Now.

Contract/Assured Shorthold Tenancy (AST)

Are they in a fixed term or Periodic tenancy?

If the tenancy is periodic, they can leave but must give you a month’s Notice or pay rent in lieu of Notice. Regardless of what your tenancy agreement says we are not entitled to more than one months notice ending at the end of a rent period (the day before rent would be due) – this should be stated in the contract and if it is, the Deposit Protection Schemes will release deposit to cover rent in lieu of Notice.

If the contract is still in a fixed term, the only way that it can end before the end of that term is if there is a Break Clause or the landlord obtains a court order. It is hard to predict how government might act to protect tenants in the aftermath but under current legislation rent is due until the end of the fixed term unless the landlord or tenant finds a replacement tenant – unlikely under the present circumstances – therefore the tenant is liable for that rent and you can take legal action to recover it from the tenant or call on the Guarantor – you may need to wait until things settle down and the full extent of the debt is clear to all parties.

Government have taken action to ensure that people continue to get income (see links above for details) – this is the only way to keep the wheels of our economy turning, it will come at great cost to us all in future but it’s absolutely necessary and therefore it’s inappropriate for any link in the chain to “hoard” that income.  I heard from one landlord that the father of a student (a solicitor) wrote implying that the landlord was profiting from a payment holiday on his mortgage while asking his son to pay the rent.  The reality is that the son will get his loan, if in fact he is claiming one, and therefore there is no change in his financial circumstances which prevents him paying his rent despite the fact that he has chosen to return to his family home before the end of term. As we know we are not being offered a payment holiday we are being offered a “deferred payment” which must be paid with interest in future if we cannot afford to make payment now.  None of my tenants have asked me about this but if they do I will simply tell them:

“A mortgage payment holiday is not an option for me and therefore my overheads remain the same”

Those tenants who have moved out because they will not be paid enough to cover their rent are trying to act responsibly. It’s a pity that they didn’t discuss their options with you because some landlords would rather wait for all or some of their rent than have an empty property which is a liability in so many ways. File this under – Accept and keep a watch.

We cannot do viewings at the moment and few people are planning to move anyway therefore we must wait for a change and be ready when it happens.

Plan for the Future

Not only will this keep you sane it will empower you – many of us are feeling powerless at the moment and this isn’t a natural state for most of us. No one knows what the challenges might be when we survive Covid-19 therefore there are no limits to what we can plan for – Anything from selling up and sailing away to building an empire in a brave new world.

Before we go off on a flight of fancy I have learned some lessons from the present crisis:

• Video all of my properties in minute detail so that I have a virtual tour to offer potential tenants in future. Keep these updated so that I am showing the reality rather than the vision of when it had been upgraded or renovated last time.  I have always taken lots of photographs but when they cannot see the property in person a video is probably a better option.

On that note I am always shocked when people who are viewing make the comment

“It looks just like the photographs”.

I am told that many properties look nothing like the photographs which were used to advertise.  I cannot imagine why a landlord or agent would do that, the people who told me about these properties made it clear that they wouldn’t rent them because they couldn’t trust the landlord or agent who had misrepresented the property – makes sense to me.

• Keep a good stock of cheap full sugar coke and cheap fabric conditioner. This is the cheapest and easiest way to unblock a drain or toilet which has been clogged.  If the blockage is caused by items other than toilet paper – quite likely at the moment – put down a mug of fabric conditioner and leave over night to soften and separate the fibres, then a large bottle of coke and leave for a few hours until you see the blockage moving then flush a few times to clear it away. Leave the coke bottle there and suggest using it as a douche if they cannot get toilet paper.
• Have a key safe fitted at every property – anyone who is given the code can access it without meeting anyone else.
• I am very IT literate but I know that many landlords aren’t up to date with technology which is really very helpful.  There is so much that we can use but as a minimum we should all learn how to use:
  • Electronic signatures are as valid on contracts as wet signatures and a really helpful tool in times like these.
  • Video calling, helpful at the best of times but priceless at the moment – good for carrying out “right to rent” checks.  The document can be scanned and sent to you and a video call can verify that the person is the one whose photograph appears on the document.  We must not hand over keys without seeing the person face to face in normal circumstances but I expect that would be easily done by video call from the front of the property before giving the tenant the code to a key safe.

We expect the Right to Rent legislation to be updated by the end of the year but that may now be delayed.  Until we are told otherwise we must continue with the   current legislation.

A video call is also a good method of interviewing a prospective tenant who has seen the video or photographs and wants to take the property at some point in future.  Students may well do this to secure their accommodation for next year starting in September.

• Don’t keep so many Haribo in my cupboard – it turns out that I don’t feel guilty eating them when my granddaughters aren’t coming – greedy granny!

The Future

I wonder if the terms BC and AC will be used to denote the time before and after Covid-19 or perhaps BC19 and AC19? There is no doubt that this time will be more than a footnote in history and there are going to be some big changes in our lives  – apart from the fact that all our cupboards will be clean.

• Look at your attitude to risk – has it changed and if so how can you reduce your risk in future?
• Look at the type of tenants and property that you let – were you more vulnerable to loss of rent/tenants/prospects… and if so is there an alternative market that you could move into?
• I don’t talk about finance because it’s not my area of knowledge and I have followed a plan for almost all of the past 50 years – a divorce wasn’t part of it and caused more than a blip but I got back on track as quickly as I could and I am very glad that my plan has proved valid for me.  Whatever your plan, review it regularly and keep on track and if you haven’t got a plan now might be a good time to spend all that spare time making one.

I will just say that having a sinking fund prevents you from worrying about sinking.

• Are you letting HMO rooms, and have you got some which are undersized and need to be dealt with before you apply for a new licence?  Play with some alternative layouts, if you are a member of a Facebook property group ask for help or opinions on your plans – one of the things I love best about the property community is the willingness to help one another, even when we are competing for the same tenants. 

If you’ve got ensuites they do not count towards the minimum room size but you may be able to tweak the wall/door to gain a little bit of floor space in the bedroom if you are only a little short of the minimum required – this can vary from one local authority to another and you should check with them before making any changes.

• Did anything go wrong which could have been prevented?
• Did you leave some maintenance longer than was wise?
• Are there items which you can order now for delivery when we get the all clear? 

Most of us spend time chasing our tails and we should take advantage of the world slowing down as it has – I didn’t think that I would miss the sound of road traffic! Spending time planning is a good investment and may give us more time to stand back a little in future.

Wouldn’t it be wonderful to look back at this time as the time you woke up and realised that you are not living your best life?  One thing I can tell you from personal experience – “one day” never comes.

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