COVID-19 Rent Payment 'Holiday' for Renters
Updated: Mar 27, 2020
On 18th March 2020 the government issued a press release saying "Complete ban on evictions and additional protection for renters". But what does this mean in practice?
At the end of this period, landlords and tenants will be expected to work together to establish an affordable repayment plan, taking into account tenants’ individual circumstances.
The Government's Announcement
On 18th March 2020 the Secretary of State for Housing, Communities & Local Government, The Rt Hon Robert Jenrick MP, issued a press release reassuring renters and landlords affected by the coronavirus. What has been regarded as a 'radical package of measures' is being implemented to ensure that "no renter in either social or private accommodation will be forced out of their home during this difficult time." These measures will include:
Suspension of new evictions from social or private rented accommodation while the national emergency is taking place;
No new possession proceedings through applications to the court to start during the crisis; and
Protection for landlords by way of a three-month mortgage payment holiday extending to Buy to Let mortgages.
Rent Payment 'Holiday'
Whilst the government has not explicitly used the words 'rent payment holiday', it is implied within the text of the press release. In other words, tenants who are struggling to pay rent due to the coronavirus pandemic can request a payment holiday for up to three months. In addition, they will be protected from eviction within this period. Equally, landlords of such tenants can also apply for a mortgage payment holiday (which has been extended to Buy to Let mortgages) for up to three months. Landlords will therefore have no justification to reject any rent payment 'holiday' request by a tenant.
It is worth noting that the government is constantly reviewing these measures as we continue to understand the extent of the economic impact of the coronavirus on society, and we are likely to see further measures. For instance, the outgoing Labour Party leader, Jeremy Corbyn, and others, have called for an extension of the ban on eviction proceedings for up to six months, which, again, implies that renters may well have a six-month rent payment 'holiday'.
This does not mean that rent is waived altogether. It simply means that if a tenant is struggling to pay rent during this crisis, they will not have to pay any rent for a duration of three months with the fear of eviction. They will, however, have to pay the arrears from the holiday period under the terms negotiated with their landlord. According to the government, "At the end of this period, landlords and tenants will be expected to work together to establish an affordable repayment plan, taking into account tenants’ individual circumstances."
Potential Contractual Uncertainties
One can expect some landlords to show no empathy, in spite of the circumstances, and to strictly enforce the terms of a tenancy agreement by, for instance, demanding interest on the rent arrears, where applicable. It remains to be seen how the law would deal with these circumstances including other legitimately enforceable aspects of a tenancy agreement, which may compound the tenant’s financial hardship.
However, we already know that the government is thinking of a fair approach in the aftermath of the coronavirus crisis by asking the judiciary to "widen the ‘pre-action protocol’ on possession proceedings, to include private renters and to strengthen its remit. This will support the necessary engagement between landlords and tenants to resolve disputes and landlords will have to reach out to tenants to understand the financial position they are in."
Within this context, tenants may renegotiate on any contractual term deemed to be unfair in light of the economic impact of the coronavirus and landlords would have to think hard about how their conduct would be viewed by a judge if they are unnecessarily harsh or unreasonable.
Practical Tips for Renters:
It's important to act responsibly regardless of the circumstances. Don't assume your landlord would not expect you to pay rent in the next three months. Communication is vital, and continue to pay rent wherever possible.
In doing our bit to support you during this extremely difficult time, we will provide you with a model Rent Payment 'Holiday' request letter free of charge. To request a copy, please send an email to firstname.lastname@example.org.
We suggest taking the following steps if you are struggling to pay rent because of the coronavirus:
Contact your landlord before your rent is due to discuss your circumstances. Explore various affordable rent payment options. If an agreement is reached, put it in writing.
Otherwise, write to your landlord setting out your financial circumstances and request a rent payment 'holiday' for up to three months . In doing our bit to support you during this extremely difficult time, we are providing you with a model Rent Payment 'Holiday' request letter free of charge. To request a copy, please send an email to email@example.com.
Continue to review your financial circumstances and wherever possible, make regular small payments on the arrears to progressively reduce the burden on you before the end of the payment holiday.
At the end of the payment holiday, contact your landlord to negotiate an affordable repayment plan with respect to the arrears. It is anticipated that the financial circumstances for some may not improve until many months later. You should factor this into your repayment negotiations, and keep track of any legislation or government measure that may help at that stage.
Lastly, do not assume that your payment holiday would automatically extend beyond three months because your financial circumstances have not improved. You may face eviction unless your landlord agrees to an extension. If you continue to face financial hardship, seek immediate financial advice.
Click here to access the government's press release on protection for renters.
Click here to access information on the Coronavirus bill 2019-21.
For more information, please contact us.