Tenant can't afford rent - proof?

Cypruseast

There is proof of furloughing an employee. A best practice, and a government requirement is for the employer to put it in writing and ask the employee to sign it. So there is a document there to say that they have accepted furloughing (if that is the case in their instance). 

You probably should initially ask what is the status of their current employment, to allow you to better identify the direction of any further queries you have. 

What they can afford to pay, as you will understand is based on many factors including the monthly rental amount and what that then leaves them for other outgoings. The affordability is dependent upon their current take home pay which may be temporarily reduced. 

However, you should (gently) remind them that there is currently no provision for ignoring rental arrears. As such they will be liable for any shortfall at a later date, depending on whether it is prudent to grant them a temporary reduction. 

theselfishaltruist

holschubes said:

We received a text message last night from our tenants simply saying that due to covid19 they can not afford to pay the full rental amount and can only pay half....as landlords are we able to ask for proof of this? Last year we knew that the tenants were employed as a Care Home Manager and a Care Assistant, we had learnt that the care home they both worked in had been shut down but we did not question our tenants as we decided as long as the rent was still being paid then that was all that mattered, so currently we do not know what their employment status is or where they work, but they have had no problem paying the rent up until now. The government are helping people and with furlough are paying 80% of peoples wages, am I correct in thinking this? Surely as landlords we have a right to ask our tennnts for proof of why they can't pay the full rent. Our first question back to them was "Have you lost your jobs?" and are yet to reply. It's a stressful time for everyone and as landlords we are very understanding of the current situation but where does it leave us. I know we can ask for a mortgage holiday period but still, I would like proof of why they can't pay.
Many thanks.

There is no reason why you should accept this. They are contracted to you to pay rent. Of course, if you wanted to accept less rent during the crisis, that's up to you. Perhaps you can reduce the rent as a kind of loan, but they need to pay more in future?

But, there are probably not many people in the country who literally cannot pay rent at the moment, as the government has covered most bases (although there may be some cracks people are falling through).
If they are furloughed, they can claim 80% from the state. If they have been laid off completely, they can get Universal Credit (although there maybe a waiting period - and this might be the issue). Also people are generally not going out at the moment, meaning most people's spending is very low. I'm not saying there aren't people in trouble, I just think it needs to be proven.

If they're refusing to prove why they can't pay, I would not accept it myself. 

I would speak to them and find out what's happening and maybe they genuinely cannot pay rent,
but if they're trying it on, shame on them tbh.. 

Although, also be careful about it turning into a dispute. With courts mostly, and evictions on hold, you could end up losing ALL the rent for months and months if they just outright refused. 

[Deleted User]

@holschubes You can ask for proof but the tenants are under no obligation to provide it.  There's hee haw you can do at the moment in terms of evicting even if the tenants are in arrears since courts have suspended possession order hearings for the time being.  Be pragmatic, take what the tenants are offering to pay at the moment but make it clear the full amount is still owed.  Send them rent statements showing how much arrears are accruing each month.  Then when things start to go back to normal work out a payment plan to clear the outstanding arrears and look at evicting if necessary.  If you push the tenants too hard now then they can easily tell you to bog off safe in the knowledge there's nothing you can do for the foreseeable future.  Slowly, slowly catchy monkey.

Comms69

llubrevlis2000 said:

All these tenants think they have three months rent free accommodations They won’t be happy with the end result.

It’s not a free rent period it’s a “holiday” a bit like the mortgage holiday for the landlords. The landlord agreed to add the interest onto the loan and repay the extra interest over the term or add it to the Lon and just pay more interest in the future.

The tenants still owe the monies to the landlords as per their contract and if an agreement isn’t arranged with their landlords (in advance) they could end up with late payments, followed by a default, followed by a CCJ on their credit history/file shortly afterwards. The credit reference agencies can now ask for rent references on their files so if a landlord has not been paid it could end up on their report for future landlord credit reference checks.

Plenty of people won’t get back into private renting or even get a mortgage (for at least 6 years) if that is their plan. 
 

Good luck to them!

Rent arrears are not reported to credit agencies. Which make me wonder what your experience in this field is. 

warby68

Someone offering half (rather than nothing) sounds like they are trying to me.
These are unprecedented circumstances - benefit of the doubt would be my stance for previously good established tenants - at least for the 3 months mentioned. Even asking for proof isn't much as they could tell you anything - but it could be another kick in the teeth to someone really struggling.
Make it clear that the money will still be owed and that how things are resolved in the longer term is a discussion for another time.
If you have hardship as a result you should seek concessions from your lender.
I might be more generous than most but still believe in treating people as you would like to be treated and in this time like no other sharing of any financial pain seems fairest, especially when recourse is limited anyway. You are more likely to get a better long term outcome if you treat people well when you can.

wesleyad

lisyloo said:

wesleyad said:

The rent will still be payable at a later date. It's not a reduced rent, it's an agreement to put off full rent until a later date, preferably with an agreed payment plan. So really you are not losing out (unless they don't stick to the plan, but then you 're not really in a worse position than now).
Check out the guidance here:
https://www.gov.uk/government/publications/covid-19-and-renting-guidance-for-landlords-tenants-and-local-authorities

There’s a difference between liability and ability to pay. There’s is no way to get money from people who genuinely don’t have it.

I agree, that's my point. If they literally cannot pay now, then there's no point trying to get blood out of a stone. What makes more sense is to say, for example, we'll skip this month and add it in 12ths to the rent for the next year. This way you have more chance of getting the money back. Just burying head in the sand and demanding full rent isn't helping anyone. 


Just to add, that (some less genuine) people think its free rent if they ask for it and therefore some people will try it on.Once they realise it's not, and that it's still due, some will end up paying. Others who are genuinely in financial trouble will happily take a delay in rent (been there)

rexmedorum

If the property has a mortgage you could look into applying for a repayment holiday.

Crashy_Time

The tenant has all the power at the moment, you won`t be able to evict them for months and you don`t have any rights to know their work/financial business, apply for your mortgage holiday, take half rent for a while and if they won`t communicate with you serve notice when you can, of course you then have the chore of finding a new tenant.

mattyprice4004

BrassicWoman said:

wages are only backstopped for companies in difficulty. that won't be the care sector. tourism, travel, yes. core services, no.

That's not even slightly correct - any and all industries are eligible for the furlough scheme. 

david_a

My tenant sent me a similar text explaining he wouldn’t be able to meet the full rent. As a good tenant I am happy for him to pay what he can now on the understanding he will make it up later.
Its worth mentioning that the 80% of wages is based on basic wage, no commission or overtime is taken into account as I understand.