EXCLUSIVE: First signs of tenant rent defaulting emerges

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LandlordZONE has heard from a mortgage broker, letting agent and landlord about the difficulties the sector is facing during the crisis.

First signs that tenants are beginning
to feel the economic pain of Coronavirus are beginning to emerge, LandlordZONE
can report.

An agent in North London,
Dreamview Estates, has told us that he’s already had three tenants unable to
pay their rent this week, including one stuck in Peru who is unable to return
to work after the country went into lockdown.

Angus Stewart, chief executive at mortgage
broker Property Master, says landlords are reporting that some tenants are late
with rent payments or may not be able to pay their rent at all.

He tells LandlordZONE: “One landlord’s tenant hasn’t been paid by his Italian company so can’t pay the rent. Where will the short-fall be met from?” The broker is also urging lenders to take an understanding approach when dealing with customers struggling to pay their mortgages due to the Coronavirus outbreak, and landlords facing loan repayment problems as tenants begin to default on rents.

Stewart also points out that, even though
landlords have now been included in the government’s plans to introduce three-month
mortgage payment holidays, the ‘interest will keep rolling up’.

Call for action

Speaking to LandlordZONE, British Landlords Association CEO Sajjad
Ahmad agrees that the Government needs to take landlords into consideration.

Ahmad recognises
that while some tenants are genuinely self-isolating, he says some might use the
situation as an excuse not to pay rent.

He adds: “What
support is there for landlords who have mortgages to pay? Some of our members are also now concerned that property
prices will drop and they will have trouble selling. I hope the Government will soon provide some
clarity.”

One landlord’s view

Ahmad’s were echoed by one of our
readers, Dave, who this morning said: “The mortgage holiday plan is no help to Landlords that are
mortgage-free on their let properties and depend on the rental income as their
only means of income.

“They can’t pick
money off the tree, are not able to claim benefits due to owning assets, which
obviously can’t be liquidated.

“All landlords
irrespective of their own circumstances will undoubtably have tenants that
struggle or are unable to pay their rent and will, I am sure, be sympathetic in
these circumstances and treat tenants with the empathy they deserve.

“With that in
mind will any Landlord groups be asking the government to provide additional
funding on behalf of those Landlords that have no income?”.

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