What is the legal position for a Landlord when your tenant requests a rent holiday?

ProDave

Private landlord letting one property in Scotland.

The tenant has been in for 3 years and is a good tenant.  But now, due to Covid 19 she has lost most of her income. 

I have just had a letter from her saying she "requires a 3 month rent break"

What are my legal obligations under the present circumstances?  Do I have to say yes that's okay?  And does that rent break still add up as rent arrears that have to be paid at some time in the future? or is it written off with no obligation on the tenant to make it up later?

Is there any government help for a landlord in this situation?  It is a big chunk of our household income to lose.  I don't see at the moment any scheme from the government as for tax purposes it is not "self employment" but "income from land and property" so treated by the tax man as investment income, for which I see no help scheme.

I intend to talk to her to see if she is claiming all the help she can, for instance I believe she was self employed so may be eligible for the government grant for that.  And see if there is any way she could pay at least part of the rent.

I have no intention of trying to terminate the tenancy (I would not be able to currently in Scotland even if I wanted to)

theartfullodger

Legal position is that you are free to consider it.

But get advice from very thorough & sensible  advice published Scottish associationation of landlords.

Join if not already a member,  tax deductible.

[Deleted User]

ProDave said:

Private landlord letting one property in Scotland.

The tenant has been in for 3 years and is a good tenant.  But now, due to Covid 19 she has lost most of her income. 

I have just had a letter from her saying she "requires a 3 month rent break"

What are my legal obligations under the present circumstances?  Do I have to say yes that's okay?  And does that rent break still add up as rent arrears that have to be paid at some time in the future? or is it written off with no obligation on the tenant to make it up later?

Is there any government help for a landlord in this situation?  It is a big chunk of our household income to lose.  I don't see at the moment any scheme from the government as for tax purposes it is not "self employment" but "income from land and property" so treated by the tax man as investment income, for which I see no help scheme.

I intend to talk to her to see if she is claiming all the help she can, for instance I believe she was self employed so may be eligible for the government grant for that.  And see if there is any way she could pay at least part of the rent.

I have no intention of trying to terminate the tenancy (I would not be able to currently in Scotland even if I wanted to)

The Scottish government put together guidance for landlords and letting agents during the COVID-19 pandemic.  Rent is still due as per the tenancy agreement so if you agree to a payment holiday your tenant will still legally owe you the money and evictions have been halted for 6 months in Scotland.

https://www.gov.scot/publications/coronavirus-covid-19-landlord-and-letting-agent-faqs/

ProDave

I have had a read of that.  About the only useful thing I can see is the tenant should try claiming universal credit.  The only help I see for my business would be a LOAN  but a loan does not make up for the loss of income, it just defers when I have to deal with the problem.

The advice I need is do I legally have to accept a rent holiday? and if so is that rent still due later or written off with no consequences to the tenant?

I will try the help line number.

[Deleted User]

ProDave said:

I have had a read of that.  About the only useful thing I can see is the tenant should try claiming universal credit.  The only help I see for my business would be a LOAN  but a loan does not make up for the loss of income, it just defers when I have to deal with the problem.

The advice I need is do I legally have to accept a rent holiday? and if so is that rent still due later or written off with no consequences to the tenant?

I will try the help line number.

As I said, the rent is still legally due.  A payment holiday is not the same as agreeing to write off the rent completely.  As I also said, evictions have been halted for 6 months so even if you don't agree to a rent holiday there's SFA you can do about it right now.

steampowered

A buy-to-let property is indeed an investment. As with any investment, you have to accept that sometimes it will perform worse than expected. There is no reason for the government to prop up investments - you didn't work for the income you were getting.

The right thing to do would be to talk to the tenant, find out exactly what their new income is, make sure they are getting the government support they are eligible for, and charge reduced rent accordingly. For example, if their income has reduced by 50%, perhaps you might offer a 50% rent reduction for the duration of the crisis.

davidmcn

ProDave said:

The advice I need is do I legally have to accept a rent holiday? and if so is that rent still due later or written off with no consequences to the tenant?

As far as I'm aware, (1) no and (2) entirely up to you, respectively.

Do you know what your tenant is expecting? The mortgage "holidays" which owners are getting are merely a deferral - they'll have to catch up with the missed payments and accrued interest over the remainder of the mortgage. Which is obviously easier to work out for a mortgage term of known duration than an indefinite tenancy in Scotland, so you'd need to be clear about how any catching-up was going to be done.

Mojisola

ProDave said:

Private landlord letting one property in Scotland.

The tenant has been in for 3 years and is a good tenant.  But now, due to Covid 19 she has lost most of her income. 

I have just had a letter from her saying she "requires a 3 month rent break"

 It is a big chunk of our household income to lose.  

If you don't come to some agreement with her but she doesn't have the money to pay the rent, you won't get the rent anyway. 
As the rental money is an important part of your income, isn't it better to hold onto a good tenant?  If you end up eventually going through the eviction procedure and getting a new tenant, it will cost much more than helping her out over a short period. 

ProDave

Thanks for your help.

So it seems like my response should be initially to say yes to the rent holiday while pointing out the rent would still legally be due some time in the future when they are able.

Then to point them in the direction of all the help they should be eligible e.g. the self employed grant she may get but not until June, and suggest she applies for Universal Credit and the housing element of that which should pay part of her rent.

Then go on to say if she does get some government help then talk to us about how much rent she could afford with a view to accepting an agreed lower level of rent for this period as full payment of the rent for this period.

Does that sound like a reasonable response?

edgex

ProDave said:

Thanks for your help.

So it seems like my response should be initially to say yes to the rent holiday while pointing out the rent would still legally be due some time in the future when they are able.

Then to point them in the direction of all the help they should be eligible e.g. the self employed grant she may get but not until June, and suggest she applies for Universal Credit and the housing element of that which should pay part of her rent.

Then go on to say if she does get some government help then talk to us about how much rent she could afford with a view to accepting an agreed lower level of rent for this period as full payment of the rent for this period.

Does that sound like a reasonable response?

Obviously this needs to be in writing, with a signed copy kept by both.

You should also be very specific about the period of the holiday, & over what time-frame it is then paid over.
eg. Next rent payment is deferred, then months 2 & 3 are paid at 50%, with the deferred rent paid back over months 4-9.

ProDave

edgex said:

Obviously this needs to be in writing, with a signed copy kept by both.
You should also be very specific about the period of the holiday, & over what time-frame it is then paid over.
eg. Next rent payment is deferred, then months 2 & 3 are paid at 50%, with the deferred rent paid back over months 4-9.

How are other landlords wording this?  I can't be the only one with a tenant requestion a rent holiday?