Wow, what a couple of weeks!
From just before the lockdown and then up until about yesterday, we’ve never been busier in anytime that we can remember. Guidance was being issued left, right and centre, multiple times a day. As it mounted up, we needed to consolidate and build a hub to hold it all and make it easier to update which now takes the form of the coronavirus hub.
Yesterday and today, things seem a little calmer although guidance is still filtering through and the questions keep flowing as they were.
During all of this, we too are private landlords and we too are experiencing all the same troubles our subscribers are.
Firstly, a quick note on the Guild and its services.
As you will have hopefully noticed, everything is running as normal. Like most of the population, we are working from home and have no need to go anywhere to run the Guild. We were fortunate in that we’ve always been geared up for remote working and we could if we really had to even run the Guild from an iPhone! We have an article about working from home coming soon.
We would like to apologise for all the emails recently. Normally, if we have multiple articles in a single day, we will postpone them so we only send one email per day or less. As a general rule, we hate sending any email unless you’re subscribed to the “all” email list or it’s really important and worth disturbing you over.
However, this all changed with COVID-19 and everything all of sudden became important hence the bombardment of emails.
All feedback we’ve received has been positive though and subscribers appear to have been grateful for all the information so it’s all good.
All the people we work with can and are working from home and there is no need for any of us to meet in person so the Guild is entirely compliant with government guidance.
Now onto being a landlord…
Like we mentioned earlier, we too are landlords so like our subscribers are suffering.
However, let’s begin by remembering there are some industries entirely shut down with literally zero income within a split second. For those it must simply be awful times.
Being a landlord is a bit of unique industry in the sense it’s impossible to shut down. Not only that, apart from being closed down altogether (which is the worst), we are about the only industry we can think of who’s announcements felt like punishments rather than assistance such as increasing notice periods and suspending all possession action. As we say though, we need to put this in context of other industries which have been entirely shut down and all the people who support those industries were simply out of work in an instant.
That being said, because we can’t simply shut down and stop all of our outgoings, it also means, like everyone else, we need the income to keep going. Yet that is going to be reduced massively over the coming weeks and months.
Despite what many not in the industry believe, being a landlord is not a cash rich business. Outgoings are massive when you include mortgages, repairs, insurance and everything else. For example, one of our properties has a mortgage of about £750.00 per month with a rental income of £825.00. In the last two years, we’ve put in a new boiler and then even though it already had double glazing, we put in brand new uPVC windows. In a typical landlord tenant relationship, after putting in the brand new windows (which weren’t needed) the tenant started to complain they wanted new blinds to match the new windows! All this on a profit of £75.00 per month! The total cost in the last couple of years exceeded £10k which is roughly 11 years to get back at the current rent (without the new blinds)! I should stress, this isn’t a complaint. We know perfectly what we’re doing and we have multiple properties which when consolidated into one business, money can flow between one property or another. However it makes the point that it’s not a cash rich business at all. In the interests of fairness, it’s true that the mortgage won’t last forever and after that point the profit increases but there’s another 10 years or so to go on that example so no time soon.
The announced mortgage holiday isn’t a holiday at all and the banks will simply increase the premiums to get back the money. Quite why they couldn’t simply extend the term by three months resulting in no increase in premiums is a bit strange to us. Also, we’ve been told (but not confirmed ourselves), if you take the mortgage deferral, that will go against your credit score because it’s still a missed payment even though agreed. As say, not sure if that is true or not.
When all of this first started, we believed that our income could drop as low as 70%. As time has gone on, for many, we don’t think it will be quite as much as that but will easily be 50% for most.
We’ve heard some horrific tales on the help-line and via questions from subscribers who are going to be in serious trouble though. One subscriber who rents to employees of a large company is literally going to loose every tenant in those properties by the end of this weekend because the company needs to make changes to how they operate. It’s going to be massively difficult, if not impossible, to re-let all of those properties during this period.
Make no mistake, right now, despite government wanting us to be “flexible”, it’s all about survival and conserving cash. Plain and simple.
We simply can’t afford to give permanent rental discounts and the like. Yes, some can offer a temporary discount with the shortfall being made up later but unfortunately, roofs still leak, boilers still breakdown and pipes still become blocked. All this on top of the refurbishments that are needed from time to time.
Now the 1st of the month has passed which is a common rent day for many landlords, looking at our own statistics there’s currently a massive impact. It’s across the board with commercial being the heaviest hit (for obvious reasons) and down about 60 – 70%. The residential element is probably not as bad as it could have been but it’s only the first, 1st of the month, so next month could be a lot worse. At a guess without doing the maths and comparison, we would say residential is down about 40 – 50% as of today.
We will continue to delicately chase these payments and see where it gets us.
In the most, tenants have been making contact, explaining their situation and appear to be genuinely applying for the help they’re entitled to. That will take time to filter back to us.
Student landlords are being massively impacted – probably more than most. Since schools and colleges have closed, many students have gone back home and don’t intend to return. As such, they are not wanting to pay the rent for the remainder of their term.
We heard today from a subscriber that there are even groups being set up demanding accommodation providers to cancel rents and release students from contracts!
For the avoidance of any doubt, rents remain payable and contracts remain enforceable during this time. These groups may only end up pushing the rent liability onto guarantors as most students will have alongside their tenancies.
You can see the latest government guidance for landlords and tenants here which says at para 1.1:
As a tenant, should I stop paying rent during the outbreak?
Tenants should continue to pay rent and abide by all other terms of their tenancy agreement to the best of their ability. The government has a strong package of financial support available to tenants, and where they can pay the rent as normal, they should do. Tenants who are unable to do so should speak to their landlord at the earliest opportunity.
There’s loads of information about rent payments on the coronavirus hub so we won’t repeat anymore of that here. We have also recently produced some templates to provide inspiration when replying to tenants. A new template was added today.
The question of gas safety records and other legal obligations continue. Again, we are unique in the sense not only can we not shut down even if we wanted to but, we also have to continue with all legal obligations.
We asked our engineer if willing to do some upcoming gas safety records and although he hasn’t refused yet, he replied:
… Only thing that worries me is going in and out of numerous houses per day , not just me getting it and fetching it home but spreading it from house to house. Seems mental really. Gas Safe have issued a statement but kept very quiet , and they’ve cancelled all their own inspections …
This is absolutely the point. It should not be the case that someone should have that level of anxiety and fear. All legally required routine inspections should be suspended for at least three months just like they have with some MOT’s.
Yesterday, we had a shower that stopped working and toilet not flushing in separate properties. Both had to be attended to which was done (thanks to Toolstation for remaining open!).
There is lots of guidance on our coronavirus hub about routine inspections so we won’t repeat here.
In conclusion, there’s going to be some really tough times ahead for both landlords and letting agents. Not that it helps in any way but you can be assured we’re all in the same position and we’re all suffering together with the rest of the industry.
Finally, we want to publicly give a shout out and huge thanks to all the key workers out there from doctors and nurses to the waste and recycling collectors. Unlike the rest of us who can remain cosy in our homes, they don’t really see any change and in fact they’ve got the busiest few weeks and months ahead of them.
We also think government has done a pretty good job so far. Yes, there’ll be mistakes and no doubt people will disagree with certain things (like the inspections) but taken as a whole and the speed at which all of this has happened, the sheer amount of guidance which has been issued to date along with everything they will be having to contend with is mighty impressive in our view.
To all key workers, subscribers and readers, keep safe and stay at home (apart from key workers of course who can’t).