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How do I manage rent arrears during Covid-19?

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As a result of the coronavirus pandemic, many people across the UK are suffering financial hardship and as such are struggling to pay priority bills. One recent report claims that some tenants are having to choose between putting food on the table or paying the rent.  Whether or not this report is exaggerated, this shouldn’t be a choice people have to make in the UK. In a bid to ease pressure on renters, the government has essentially banned evictions during and arising from the lockdown, so it will likely be very difficult to take legal action against a tenant who defaults directly due to the coronavirus measures. On the face of it, it would appear that landlords are left with no recourse for non-paying tenants, however legal action should always be a last resort. It is far cheaper and less stressful to deal with a situation outside of court where possible.  

What do you if your tenant can’t afford to pay rent?

You should always approach your tenants with sensitivity and understanding; it goes without saying that people often find it difficult to discuss their personal financial problems.  Quite often people can feel that they will be judged for having little or no income, even if its not their fault.  This pandemic is certainly a situation beyond everyone’s control, so it’s vital that you don’t allow any personal anxieties to impact the way that you deal with this situation.

Find out about their income and employment

The first thing would be to find out what has happened; your tenant’s options will be linked directly to their employment situation. Many employees have been furloughed and could be in receipt of 80% of their salary. This could be set to go down however, after the Chancellor, Rishi Sunak has suggested that furlough schemes could be cut to 60%. 

However, if your tenant is self-employed or outside of a furlough situation, it could mean that they have no income whatsoever. Although the government has committed to offering 80% of previous tax year income to self-employed earners, this will vary massively between individuals. In a situation such as this, it’s crucial that your tenant seeks help from specialist agencies such as Citizens Advice or the Department of Work and Pensions (DWP), this way they could possibly access benefits or other assistance if needed. 

Once you’ve determined how much, if any income your tenant is receiving, find out how much they are able to commit to paying. Although the vast majority of tenants in this situation will pay as much as they possibly can towards rent, it is a great idea to complete an assessment of income and expenditure with your tenant. This will not only show that you’re not taking more than your tenant can afford but will also ensure that they’re paying the maximum that they can offer, thus reducing the debt they will ultimately owe.

How long will this last?

Often in any rent arrears situation it is advisable to work out the length of time needed to pay off the debt. During the pandemic however, any timescale can be purely speculative and will depend on both the tenant’s affordability and government measures. The best approach in this situation is to ensure you are keeping in touch with your tenant and requesting regular updates, on a fortnightly basis for example. Whatever your approach, try and maintain a good relationship with your tenant where possible and be sure to follow up each conversation with a letter or email confirming the discussion. 

If in doubt, give us a shout!

Obviously, the whole process is dependant on good communication from both landlord and tenant, but it is a solid approach and can prevent court costs, litigation costs and unnecessary stress. The important thing to remember is to be professional and don’t let personal emotions get in the mix. If at any point you feel you are in over your head, seek professional advice.  Chancery Properties are experts at recovering rent arrears during a tenancy by working with both the landlord and tenant to maximise results.  We strongly believe that the best approach is to deal with things early on in a very professional, yet personal way.  So, if you think that we can support you, why not give us a shout?

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