Landlords facing an uncertain financial future if their tenants cannot pay the rent will start feeling the pinch over the coming weeks.
Although the country has been self-isolating or in lockdown to prevent the spread of coronavirus for nearly two weeks, many tenants would have already paid their rent for March.
The big financial test comes now as tens of thousands of tenants are on furlough and may be struggling to pay their bills.
As a landlord with an investment mortgage you can apply for a three-month mortgage holiday. During that time, you make no payments to the lender.
At the end of the holiday, your mortgage is recalculated over the remaining term, which means the payments will go up. How much depends on the length of term left to run – the more months left, the lower the recalculated repayment.
However, you should pass the saving on to your tenant to help their finances by way of a deferral.
Points to remember:
- Your mortgage payments must be up-to-date to qualify
- You self-certify the tenant needs help due to coronavirus
- You cannot fund the rent from the security deposit
- Come to a written agreement with the tenant about paying any deferred rent during the mortgage holiday
Working tenants can speak to their employers about the Coronavirus Job Retention Scheme that gives a grant to businesses that covers 80% of salary up to £2,500 a month. The self-employed apply for a similar grant.
Tenants who do not qualify for either retention scheme can apply for Universal Credit. As many Job Centres are closed, they can apply online or by telephone on 0800 328 5644.
Utility companies are also offering deferred payment plans for customers.