Tennant demanding 3 month free rent

JoeBloggs72

You could offer a temporary reduction, but this would be added back on when they go back to work/normality. They can’t have “free” Accommodation 

Grumpy_chap

I am glad to see this thread as it is an area I have been unclear on. 

As I understand it, people with a mortgage can ask for a payment holiday but for renters there is no similar help, just the ban on evictions for 3 months.  Though the Government have been particularly unhelpful in this by saying things like "landlord should pass on the advantage".

There is a big difference between mortgage holiday and rent holiday:

• Say the mortgage outstanding is £100k and the normal payments are £500 per month, made up of £300 capital plus £200 interest.  The bank agrees to a payment holiday of 3 months, so at the end of three months you still owe the original £100k, plus the 3 lots of interest, so the total debt is now £100.6k and that extra £0.6k will cost quite a lot over the remaining term as the interest is added on an extra increment for ever.
• Say the rent is £1k per month and there is a 3 month payment holiday given.  Does the tenant make good the £3k debt at the end, or is that meant to be just absorbed somehow by the landlord?

Jeremy535897

Grumpy_chap said:

I am glad to see this thread as it is an area I have been unclear on. 

As I understand it, people with a mortgage can ask for a payment holiday but for renters there is no similar help, just the ban on evictions for 3 months.  Though the Government have been particularly unhelpful in this by saying things like "landlord should pass on the advantage".

There is a big difference between mortgage holiday and rent holiday:

• Say the mortgage outstanding is £100k and the normal payments are £500 per month, made up of £300 capital plus £200 interest.  The bank agrees to a payment holiday of 3 months, so at the end of three months you still owe the original £100k, plus the 3 lots of interest, so the total debt is now £100.6k and that extra £0.6k will cost quite a lot over the remaining term as the interest is added on an extra increment for ever.
• Say the rent is £1k per month and there is a 3 month payment holiday given.  Does the tenant make good the £3k debt at the end, or is that meant to be just absorbed somehow by the landlord?

Here is an extract from Government guidance:
"1.6 As a landlord, should I stop charging rent during the outbreak?
• Landlords are not required to do this. Most tenants will be able to pay rent as normal and should continue to do so, as they will remain liable for the rent during this period.
• There is no ‘one-size fits all’ approach, as each tenant’s circumstance is different and some will be worse affected in terms of their ability to pay than others. It is important for landlords to be flexible and have a frank and open conversation with their tenants at the earliest opportunity, to allow both parties to agree a sensible way forward."
The full text is at
 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/876500/Consolidated_Landlord_and_Tenant_Guidance_COVID_and_the_PRS_v4.2.pdf

The guidance is quite clear that landlords are not expected to do anything beyond assist with cash flow, so the rent might be deferred (and a mortgage break might assist the landlord to offer a deferral), but always with an up front plan on how the arrears will be paid. The disadvantage the landlord faces is that he will pay extra interest on the mortgage, but it would be uncommon to seek interest on arrears of rent on assured tenancies. See:
https://www.propertyinvestmentproject.co.uk/blog/late-rent-payment-fees/

[Deleted User]

You mention that you don't want to ask about their financial status but do you actually know what their employment involves? Are they a key worker or have a job that hasn't closed during this lockdown and thus just don't want to pay rent for 3 months so they can have a bit of extra money set aside over the course of 3 months then get to the end of the term agreed and just leave without paying you anything? Are you holding a deposit? Sometimes you have to think of the worst outcome regardless if they have been the perfect tenant for the last ten years. A perfect tenant can soon become a nightmare tenant. 

PixelPound

So many people are taking payment holiday as meaning free, e.g. "the government pay it for you".

parrott500

The last I knew they might of been working part time, we didn`t take a deposit at the start 10 years ago after following advise, but that might have been bad advise  so I`m now expecting a quick exit sooner or later.

parrott500

When the Government announced the mortgage payment holidays for BTL rental homes I new it would cause a problem for all us Landlords. I know through my accountant one Landlord had 10 DSS default payment in the first week saying you are able to get a payment holiday so we are too  probably spent there rent on hot tubs, drink, drugs and fags. 

tempUsername280720

Take a mortgage payment holiday.

sharpe106

Mortgage payment holiday is not free. Unless the tenant is in hardship why would the landlord want to pay for that.

Although think after 10 years of being a good tenant I would be far more likely to try to sort something out as getting new tenant could be hard especially at the moment.  

parrott500

I`ve posted a letter to the tenant and the 21 page Guidance Government Document that explains everything, I`ve explained the pit falls of a BTL mortgage payment holidays for me and the extra interest charges and how I would have to pass this on in future in future rent. I`ve also said I would help if I can with a payment plan but this would probably make it unafordable for the tenant.

But no way will I be giving full rent free period for 3 months as Boris said we are in this together.