Do landlords qualify for COVID-19 cash support?

The latest, and most likely final, cash help for landlords and the self-employed who are struggling financially due to coronavirus is open until 30 September 2021.

Although the Government has spent billions on cash benefits to keep small businesses afloat, landlords have slipped through the cracks.

While Chancellor Rishi Sunak has been willing to give a lifeline to small businesses that have lost money during the pandemic, unfortunately there has been little help for property investors.

This is because coronavirus cash aid protects business earnings, but not income from investments.

The fifth SEISS grant will cover the months of May to September 2021 and will differ from the previous four SEISS grants in terms of how the payouts are calculated.

The size of the grant will be determined by how much your turnover has been reduced in the year from April 2020 to April 2021. To be eligible for the fifth SEISS grant, you must be a self-employed landlord or a member of a partnership.

“Throughout the pandemic landlords have had very little financial support from the Government, so the fifth Self-Employed Income Support Scheme presents in all likelihood a final opportunity for landlords that are eligible to seek help,” says Daniel Lee, Principal, Total Landlord Mortgages (pictured).

But it’s important to be aware that being awarded the grant may present issues arising further down the line when it comes to applying for a mortgage.”

Here, LandlordZONE mortgage partner, Hamilton Fraser Total Landlord Mortgages explains what the scheme is, how to check if you qualify and provides a breakdown of how much you could be entitled to.

What is the Self-Employed Income Support Scheme (SEISS)?

The Self-Employed Income Support Scheme offers financial help to sole traders and partnerships who need cash help due to the impact of the coronavirus pandemic.

Do landlords qualify for SEISS?

Generally, landlords with buy to let investments do not qualify for SEISS. However, landlords with holiday lets tax-treated as businesses rather than investments can apply for an SEISS grant.

Here is a quick test to check if you are eligible:

• You are unlikely to qualify if you report your letting profits on the land and property pages of a self-assessment tax return or pay council tax on a rental home instead of business rates

• You should qualify if you complete the self-employed pages of the tax return for a furnished holiday letting business

• SEISS rules exclude companies or trusts from making a claim

If your tax returns show you are eligible for SEISS, HM Revenue & Customs should have already  been in touch with you.

Check if you can make a SEISS claim

After confirming if you qualify for SEISS as a landlord, you must pass three more tests to make a claim.

You must have traded in both 2019-20 and 2020-21

To pass this section, you must:

have filed a 2019-20 tax return by 2 March 2021

have trading profits of £50,000 or less

have trading profits that at least match any non-trading income, for example a pension or buy to let rents

You must also:

• continue trading in 2021-22
• show you expect a significant loss in profits due to COVID-19 between 1 May 2021 and 30 September 30 2021

When assessing your claim, HMRC will compare your turnover between April 2020 to April 2021 with your business income in 2019-20 or 2018-19.

How much is the SEISS grant?

How much SEISS grant you receive depends on how much turnover you have lost due to COVID-19.

How much your turnover is down by	What you’ll get	Maximum grant
30 per cent or more	80 per cent of 3 months’ average trading profits	£7,500
less than 30 per cent	30 per cent of 3 months’ average trading profits	£2,850

Source: HMRC

For example, If your average profits were £30,000 over four tax years:

• Divide by 12 = £2,500

• Multiply by three = £7,500

If your profits were down by 30 per cent or more:

• Work out 80 per cent of £7,500 = £6,000

The grant is £6,000

If your profits were down less than 30 per cent:

• Work out 30 per cent of £7,500 = £2,250

The grant is £2,250

You should deduct tax and self-employed national insurance from the grant, which you should report on your 2021-22 self-assessment. The grant amount is calculated before deductions, which are the responsibility of the landlord or self-employed to pay.

Making your SEISS fifth-round claim

You must make a claim yourself online on or after the date HMRC supplies.

You will need your turnover figures, a Government Gateway ID and your unique tax reference (UTR) together with personal and business details like your national insurance number.

If the claim succeeds, HMRC will transfer the grant money to your bank within six working days.

Find out more about SEISS for landlords and the self-employed

SEISS and mortgages for landlords and the self-employed

It’s important to note that many lenders are rejecting mortgage applications from landlords and the self-employed who have claimed the SEISS grant.

“When considering a mortgage application, lenders tend to scrutinise the last two years of accounts to assess earnings and loan affordability so it is vital to only apply for the SEISS grant if needed. The impact of the pandemic could influence mortgage decsisions until at least 2023.” – Daniel Lee, Principal, Total Landlord Mortgages.

Some banks are also asking landlords and the self-employed to pay in larger deposits. For example, Metro Bank won’t lend to customers taking a SEISS grant unless they put down a deposit of at least 20 per cent of the value of their home, while Santander demands 25 per cent.

Consumer watchdog, the Financial Conduct Authority, says lenders should treat customers taking a SEISS grant fairly.

Office for National Statistics data puts the number of landlords in the UK at 2.66 million, while five million workers are self-employed.

Two out of three feel penalised by lenders when seeking a mortgage, says an Association of Independent Professionals and the Self-employed (IPSE) survey.

Mortgage lender trade body UK Finance says lenders must make checks to ensure loans are affordable.

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