UK Landlords need to prepare to survive these challenging times By David Alexander, joint Managing Director of apropos
28 August 2020 2216 Views
There has never been a harder time to be a landlord in the UK. The pressures that the last six months have incurred on many individuals in the private rented sector are beyond what anyone could have predicted or needed. A sector that was already being challenged by legislation, financial restrictions, and regulatory pressures has found itself at the heart of the pandemic and the many serious issues that it has raised.
Everyone involved in the sector knows this and will have spoken to landlords who are deeply distressed and worried about their current situation. They will be concerned about their tenants, about their properties, about their finances, and about their future in a sector that has never before faced such challenges. Although we are already six months into this situation, it is clear that the next six months are not going to get any easier.
At this time, it is essential then that landlords are supported, helped, and aided through this difficult time to get through to the other side with their property and their sanity intact. Although most landlords will have already had to put contingency plans in place to survive the last six months, they will need to continue to plan for the next six months and beyond as the issues raised by coronavirus have not gone away.
Landlords must look at their entire way of operating to ensure they survive this period. Firstly, they must have clear and regular contact with their tenants. For those whose tenants have not been impacted by the pandemic and continue to pay rent, they are the lucky ones. For other landlords whose tenants have been affected, they must keep close contact with their tenants so that they know their circumstances and their ability to pay, and what is likely to occur in the next six months. Only by understanding what is happening to their tenants, can landlords understand what is happening to them.
Making a payment plan is essential. Even a limited rent is better than none, and some structure to the next six months is crucial. Longer term, it is vital that you have an understanding of what level of payments are coming in, and you plan for the financial implications of potential reduced income.
Many landlords can find these situations difficult and so, for some who may never have used an agent, this may be the time to reconsider. Given the increasing complexities of the regulations of what can and cannot be done in the various parts of the UK at the moment, it can be all but impossible for an individual landlord to keep on top of the changing legislation. The extension of the evictions ban in England, which has different timings and rules in Scotland, Wales and Northern Ireland, is simply the latest example of the rapidly evolving complexities of the legislative process.
Once you know what is happening with your tenant, it is important to understand what is happening with your lender, if you have one. All lenders have a duty of care to their customers, so they should treat you fairly and sympathetically. If you have had a payment holiday on a buy-to-let, then you need to keep in close contact with the lender to see if they will sustain this over the coming months. They should also consider reduced payments’ or reorganising your financial arrangements to lengthen the loan period for example. It can be beneficial to seek advice on financing as this has become an increasingly complex market, with lenders changing their attitudes at short notice and adapting to their perception of the viability of certain markets.
You must apply for all grants and government loans possible, although we appreciate that many landlords don’t qualify for these under the various current schemes. Nevertheless, it can be worth seeking advice on any financial support that you may be entitled to but which you have not previously considered.
While many landlords have found this period distressing others have seen this as offering the potential for expansion. The increase in the Stamp Duty Land Tax (SDLT) threshold to include landlords has made many investors consider this as an opportunity to expand their portfolios. This may be a good time to invest but landlords need to consider any future impact the pandemic may have on the market. There are indications that, although we appear to be coming out of this relatively strongly at the moment, the threat of unemployment looms and any sizeable increase in people losing their jobs is likely to disproportionately impact demand in the private rented sector.
Although these last six months have produced unprecedented and unwanted changes in society the reality is that it has happened. Adapting to changing circumstances is essential in these uncertain times and landlords need to get smart and get busy making sure that they have done all they can to maintain their investment in their property and ensure that one year from now they are still in business and, hopefully, thriving.
Is this the right time...