BREAKING: Direct Line confirms doors closed to all new rent guarantee policy claims

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One of the UK’s largest insurance companies says there is no legal framework available to it that would enable the insurance giant to pay claims now that evictions have been suspended for three months by the government.

One of the UK’s largest insurance companies, Direct Line, has confirmed to LandlordZONE that it has closed its doors to new rent guarantee policy claims, but will honour those which are already under way.

The shock news confirms our story earlier this week that key insurance companies in the UK were withdrawing, or had already withdrawn, from the rent guarantee market.

Direct Line’s announcement will not be welcome news for its thousands of rent guarantee landlord clients, not least because until relatively recently it ran TV adverts promoting the product starring Hollywood actor Harvey Keitel (pictured).

“We are currently in unprecedented times as the impact of COVID-19 spreads through all aspects of the UK economy,” a statement from spokesperson Unni Henry from the parent company The Direct Line Group, says.

“The Government’s commitment is that no tenant will be evicted during a three month period and that landlords are able to apply for a three month payment holiday on their Buy to Let mortgages if necessary.

“During this three-month period we cannot pay any new rent guarantee claims as there is no legal mechanism to allow us to take a claim forward.

“Following the end of this period landlords and their tenants will then need to work together to establish affordable repayment.”

Henry says Direct Line is offering landlords practical support so they can help their tenants during the crisis including digital templates for payment plans.

Also, its legal advice helpline will
continue to be available throughout this period. Landlords should refer to
their policy documents for contact details.

“If the landlord’s rent guarantee claim has already been accepted and they are in receipt of rent guarantee payments, these will continue to be paid during the pandemic,” says Henry.

“For discussion on individual claims, landlords will need to contact the claims team via the number in their policy documents.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – BREAKING: Direct Line confirms doors closed to all new rent guarantee policy claims | LandlordZONE.

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Students – What are my rights and obligations if they leave?

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I have a student HMO. The tenants are still on a fxed term joint and several AST for 10 months commencing 9th Sept 2019. One of the tenants who is Polish has asked to be able to terminate his tenancy early in April subject to travel availability to return to Poland.

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LATEST: Lender exodus from buy-to-let mortgage market in full swing Teaser

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Research by a leading mortgage brokers reveals both small, medium and large lenders suspending or severely reducing their buy-to-let mortgage ranges.

Lenders are pulling the plug on mortgage applications and reducing
their buy-to-let product ranges, leaving landlords struggling to find deals.

Online buy-to-let mortgage broker Property Master warns that the buy-to-let
mortgage market is going into reverse as the impact of the Coronavirus begins
to bite, with some lenders even quitting
the market for the foreseeable future. 

“Landlords are finding that their borrowing options are being
drastically reduced as lenders respond to this new record low base rate
environment and fears of falling house prices by withdrawing entire product
ranges,” says chief executive Angus Stewart.

Products withdrawn

“We have had clients mid-way through a mortgage application only
to find the process is halted and the product withdrawn before they can reach
completion and the release of funds.”

It reports that Saffron Building Society, which offered a range of
mortgages including for portfolio and limited company landlords, now has no
products available, while The Melton Mowbray Building Society and Vida
have followed suit.  

Together Money has suspended lending in both the buy-to-let and
residential market, and Barclays has withdrawn all its products for portfolio
landlords. 

The Mortgage Works and HSBC have both withdrawn their tracker
mortgages for the foreseeable future, while other lenders are tightening
criteria; Kensington Mortgages, for example, has
reduced maximum loan to value lending criteria down from 85% to 75%. Some
lenders have increased rates despite the 0.65% fall in base rate.  

Stewart adds: “We would urge lenders to continue to support
landlord customers, especially those who were moving successfully through the
mortgage application process and would otherwise have expected to be shortly in
receipt of a loan.  

Similarly, we would urge banks to stand by the
commitment made by the Government to provide payment holidays to landlord
customers.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Lender exodus from buy-to-let mortgage market in full swing Teaser | LandlordZONE.

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My number one piece of advice is ALWAYS communication

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From today, the Coronavirus Act extends the notice period required for possession using Section 8 and Form 6a (Section 21) from two months to three months.

I have worked with landlords for 27 years, been through two recessions and seen the crippling effect that falling into rent arrears can have both on landlords and tenants.

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Bank Base Rate held at 0.1%

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The Bank of England’s Monetary Policy Committee (MPC) held its previously scheduled meeting for March and voted unanimously to hold the rate at the 0.1% emergency level.

MPC summary and policy on tackling Covid-19:

“The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target

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Housing activists launch campaign to prevent rent clawback via ‘payment plans’ once Coronavirus crisis is over

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Acorn says it has 38,200 signatures to support its campaign to prevent rent rises once the pandemic has subsided.

Community and
tenants’ union Acorn wants the Government to stop
landlords charging higher rents after the Coronavirus crisis in order to recoup
lost income.

It says thousands of renters will be out of
pocket for weeks or even months as they try to pay back arrears through payment
plans once the crisis has abated.

Instead, the three-month payment holiday for
buy-to-let mortgage holders should go together with a rent suspension with no
expectation for that rent to be repaid.

It adds that many renters will simply have to
keep working to avoid spiralling rent arrears debt, exposing themselves and
others to unnecessary risk, while landlords will have the asset of a house when
they pay off their mortgage. 

Acorn’s campaign on change.org to protect
renters has already got more than 38,200 signatures of its 50,000 target.

Aidan Cassidy, Bristol organiser for Acorn,
says a crisis could occur once the temporary eviction ban lifts, when landlords
seek to collect unpaid rent for the pandemic period – but many renters will
have lost their incomes in part or entirely.

“There needs to be no expectation of rent to
be paid at the end. What we need is a rent freeze” says Cassidy. “Otherwise we’ll find ourselves in a debt
crisis.”

John Stewart, policy manager for the
Residential Landlords Association, says it agrees with the Shadow Chancellor
John McDonnell, who told the House of Commons that the Government  should
‘ensure that rents are paid, not merely that payments are suspended for this
period.’

“Tenants affected should look at the
comprehensive package of measures the Chancellor has announced to support the
incomes of those in employment and those claiming benefits,” he tells
LandlordZONE.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Housing activists launch campaign to prevent rent clawback via ‘payment plans’ once Coronavirus crisis is over | LandlordZONE.

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BREAKING: ‘Coronavirus could wipe out the UK’s smaller Guaranteed Rent operators’

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Industry experts are warning that hundreds of the smaller, under insured and less robust operators in this sector will soon face serious financial problems as tenants struggle to pay their rent.

The UK’s small ‘guaranteed rent’ companies operating within the private rental market face being forced out of the market over the coming weeks and months as the Coronavirus crisis intensifies, industry experts are warning.

Guaranteed rent schemes are popular among landlords who want peace of mind from a reliable rental income, and a sizeable industry has sprung up to offer this kind of service.

But industry experts are warning that small operators who don’t hold professional indemnity insurance or possess other financial buffers now face being wiped out if tenants stop paying rent in large numbers.

“No one ever predicted or dreamed that we would be where we are today,” says consultant Eric Waller. “It was inconceivable even six months ago that millions of tenants would face losing their jobs and be unable to pay their rent – and the smaller guaranteed rent operators just aren’t set up to cope with that.”

Rent default rates

The large corporate estate agents and property companies who are also active in this field plan for up to three to four percent of their tenants not paying their rent, in normally times.

But with some rental markets dominated by low-income and other vulnerable tenants, anything between 20% and even 50% of them could struggle to pay their rent as the economic shut-down bites, LandlordZONE has been told.

“The guaranteed rent sector is under threat because the commercial agreement between the landlord and the company involved is now all up in the air as tenants struggle to pay their rent,” says Paul Shamplina of Landlord Action.

“I can see the smaller operators who don’t have the financial buffers in place simply giving the keys back to the landlords.”

Walker says the difference between the large corporates, who Guaranteed Rent business models are robust, and the small-fry operators is that the large players have professional indemnity and other insurance policies in place to cover them, and therefore are protected from a huge downturn in rent payments. But the smaller ones often don’t and therefore are exposed

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – BREAKING: ‘Coronavirus could wipe out the UK’s smaller Guaranteed Rent operators’ | LandlordZONE.

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TONIGHT: Emergency COVID-19 Property Investors Summit (online)

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This months Baker Street Property Meet is taking place online as an Emergency COVID-19 Property Investors Summit. Its a free to join event with over 1000 people already registered.

In this Property Investors Emergency Summit, our experts will give their views on the impact of Covid-19 on different property investment sectors:

Ranjan Bhattacharya –

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Coronavirus latest: Government says all rental and sales home moves should stop

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Government has strongly advised that home movers in both sectors should stay put unless for contractual reasons a property rental or sale must proceed and neither side can agree to delay.

The government has confirmed that all house moves other than those which contractually cannot be paused are to stop in both the sales and private rental markets but has allowed tradespeople to continue repairing and maintaining properties as the Coronavirus lock-down intensifies.

In a statement issued late yesterday, a spokesperson from the Ministry of Housing, Communities and Local Government (MHCLG) said: “Home buyers and renters should, as far as possible, delay moving to a new house while emergency measures are in place to fight coronavirus.

“If moving is
unavoidable for contractual reasons and the parties are unable to reach an
agreement to delay, people must follow advice on social distancing to minimise
the spread of the virus.

“Anyone with symptoms, self-isolating or shielding from the virus, should follow medical advice and not move house for the time being.”

But landlords and letting agents worried that the lockdown might include looking after rented properties were given some relief from the lockdown.

MHCLG has revealed that work carried out on people’s homes, including maintenance and repair work on rented properties, can continue.

The ministry has urged landlords to ensure that any tradespeople visiting their properties follow Public Health England (PHE) guidelines “including maintaining a two metre distance from any household occupants, are followed to ensure everyone’s safety,” a spokesperson said.

“No work should be carried out in any household which is isolating or where an individual is being shielded, unless it is to remedy a direct risk to the safety of the household, such as emergency plumbing or repairs, and where the tradesperson is willing to do so.

“In such cases, PHE can provide advice to tradespeople and households.” Its regional helpline numbers are available online.

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Newly released for 6A confirming 3 months notice

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The MHCLG .Gov website (click here) has just released new Assured Tenancy forms including 6A which confirm the new government policy of 3 months notice. This is also under review and as threatened in Scotland could be increased at a later date to 6 months.

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