Coronavirus - Accessing Financial Support

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Last updated 17 May 2021 - end of mortgage holidays

Introduction

To control the spread of the new strain of the coronavirus, the Government announced that England will go into national lockdown on 4 Jan 2021. This new lockdown places further restrictions on which business can remain open. As a result, more tenants are likely to find themselves in financial difficulties over the coming months.

With some form of restriction set to remain in place until at least June 2021, the Chancellor has announced an extension to financial support packages like the self-employment grant or the furlough scheme.

This guidance has been updated with the latest announcements in mind.

What is our position on this?

The NRLA is calling for the Government to support the private rented sector through:

Interest free, government guaranteed hardship loans for tenants. Providing tenants with a means to pay off COVID-related arrears will sustain tenancies and remove any risk of eviction as furlough is removed. These should be paid directly to landlords and should cover all arrears accumulated since the start of the pandemic. A similar scheme has already been introduced in Wales.
Tenant hardship grants through local authorities. Where the tenant is in receipt of benefits, we are calling for arrears to be covered through ring-fenced funding for councils.
Keeping LHA at 30th percentile at the minimum – and ideally raise it to cover median market rents – to help ensure tenancies can be sustained.
Suspending the Shared Accommodation Rate for under 35s for 12 months. Currently, those who are single and rely on benefits can only claim for the cost of a room in a shared property. A 12 month suspension would support those who face unemployment due to the impact of the pandemic to sustain existing tenancies and allow house moves where need be.

We have made a joint statement with 10 other organisations - The Big Issue Ride Out Recession Alliance, Crisis, Citizens Advice, Joseph Rowntree Foundation, Money Advice Trust, The Mortgage Works, Nationwide Building Society, Propertymark, StepChange Debt Charity and Shelter - calling for the Chancellor to provide direct funding to support landlords and tenants to address arrears.

We also continue to call for possession and court reform.

Are you struggling financially due to coronavirus? Share your story with us.

We know that the pandemic has been a challenging time for both landlords and tenants.

NRLA research has found that the majority of landlords have experienced a drop in income during the pandemic. Many of the landlords who have experienced a drop in income rely on this rental income as their only source of finances. Unfortunately, much of the financial support available to weather the impact of coronavirus is not available to landlords, meaning that where the tenant is unable to pay their rent, landlords can struggle financially.

Despite this, where tenants have requested some form of financial support from their landlords, our research has shown that the majority of landlords have gone above and beyond to support their tenants and work together to sustain their tenancies.

However, this situation cannot continue forever and landlords and tenants need more support to sustain tenancies through further restrictions and lockdowns. To help represent your interests and campaign for a fair deal for landlords, we need case studies we can point to in our discussions with the Government over further financial support.

If you would like to get involved and support our work on this, please share your story with the policy team.

What is a mortgage holiday?

Mortgage holidays were part of the Government’s response to the coronavirus emergency. Lenders agreed to allow people with buy to let mortgages to apply for a mortgage holiday of up to six months. During a mortgage holiday, scheduled mortgage payments were paused. However, interest continued to accrue meaning higher payments would be required afterwards.

When can I apply for a mortgage holiday?

The window for making a mortgage holiday application because of coronavirus has now closed as borrowers had to make their first application by March 31 2021 at the latest.

All mortgage holidays will come to an end by 31 July 2021.

If you are struggling to make your mortgage payments then you should contact your lender directly for tailored support.

Will my credit rating be affected if I took the mortgage holiday?

UK Finance have confirmed that 'firms will make every effort to ensure that the payment holiday does not negatively impact on your credit file.' However, in the short term at least, some mortgage providers are using whether you have taken a mortgage holiday as a factor in deciding whether or not to grant a buy-to-let mortgage.

Financial support for tenants

At the start of the pandemic, the Government announced a number of measures to help financially support people who may be struggling with their finances. These measures have been extended throughout the coronavirus pandemic and are now set to end in September 2021.

What financial assistance is available for employees who are affected by the coronavirus?

The landlord may offer a rent reduction or a rent deferral to tenants affected by the coronavirus.

In addition, until September 2021, employers can access a grant from HMRC to cover a portion of their employee's salary to ensure their job is retained. This will cover 80% of salary (up to a maximum of £2,500 a month) for each employee until the end of June 2021. After this, the amount covered will be reduced each month until the Job Retention Scheme ends in September 2021.

With full restrictions planned to end in June, many tenants will be moving off furlough in the next few months. If your tenant has been furloughed or made redundant it would be sensible to contact them, if you haven't already, to discuss their finances and arrange and payment plans ahead of time.

Where a tenant is unable to work due to sickness or self-isolation, they are entitled to statutory sick pay if they qualify for it, or the sick pay their terms of employment offer above that amount.

What financial assistance is available for self-employed tenants?

If your tenant is self-employed they may be able to apply for a grant from the Self-Employment Income Support Scheme.

The fourth grant, covering February to April 2021 can be applied for from late April 2021. If your tenant has been trading in 2019/20 and 2020/21 tax years, then they may be eligible.

If they are eligible, then a grant of up to £7500 could be available to them provided they intend to continue to trade and are either currently actively trading with a reduced demand due to coronavirus, or they were previously trading but are temporarily unable to do so due to coronavirus.

A fifth and final grant will be made available and can be applied for in summer.

My tenant does not benefit from any of the above financial support packages. Where can I signpost them to?

Your tenant should apply for Universal Credit at https://www.gov.uk/universal-credit.

Where it is not possible to apply digitally, they can apply by calling -

Universal Credit helpline: 0800 328 5644

Welsh language: 0800 328 1744

Tenant support FAQ

Are all tenants entitled to a rent holiday during lockdown?

No. Those unaffected by the coronavirus should continue to pay rent as normal. Similarly, tenants who can still afford to pay their rent after their circumstances change should also be encouraged to pay their full rent as normal.

Ultimately, any rent that is deferred during this period will still be expected to be paid back later as part of a payment arrangement. To avoid potentially unmanageable living costs in the future, tenants should be encouraged to pay their rent if they can afford it, and landlords should provide them with support in applying for assistance where it may be available.

Should I contact my tenants at this time?

It is sensible to be proactive in this situation. Contact your tenants without physically meeting with them. You should use this opportunity to discuss their financial circumstances, whether they are employed or self-employed, and whether they are likely to have to self-isolate.

If they are likely to struggle in paying the rent, you may be able to assist them with guidance or by arranging some form of assistance such as a temporary rent reduction or signposting to financial support.

Further guidance on this can be found in our guidance on managing arrears responsibly.

My tenant has asked me to surrender the tenancy early as they are experiencing financial difficulties due to the coronavirus. Should I accept surrender?

This will depend on your own circumstances and whether you can find a suitable replacement tenant. With the market reopened you may be able to find suitable replacements. However, you should consider whether it would be better to work with the tenant to arrange a payment plan or try and assist them with applying for benefits before accepting their offer to surrender.

Are there any plans to reduce the wait time for Universal Credit claims?

No reductions in wait times have been announced at this time. The NRLA are pressing the Government to reduce the wait times to ensure that landlords and tenants remain financially secure.

Where else should I advise my tenant to go for financial support?

Tenants should be encouraged to speak their local authority for a discretionary housing payment. If they are clinically vulnerable, local authorities are also being given a fund of £32 million to support these tenants through the latest lockdown.

Alternatively, they may seek an advanced payment on their Universal Credit by contacting the DWP on the Universal Credit helpline.

Is there any support available regarding credit card payments or overdrafts?

Yes. From 14 April 2020 lenders have offered further financial support for those affected by the coronavirus.

Under these proposals borrowers can apply for an initial credit card holiday for three months up until 31 March.

If the borrower has already applied for a holiday then they can ask for a further three-month extension.

Where two payment holidays have already been taken, borrowers are encouraged to contact their lender to arrange tailored financial support.

My tenants are concerned about paying their utility bills. What can be done to assist them?

Advise your tenant to contact their energy supplier as they are expected to provide support if someone cannot pay their energy bills at this time. The exact nature of this support will differ depending on circumstances and supplier.

Moneysavingexpert.com has an excellent help page on this topic. It might be worth signposting your tenants towards this if they are struggling.

Will there be any council tax relief during this period?

Local authorities are being provided with a £500 million emergency fund, the bulk of which is intended to be targeted at council tax relief.

My tenants cannot afford rent. Can I use the security deposit before the tenancy has ended?

No, the deposit can only be used at the end of the tenancy. However, you can claim any rent arrears at the end of the tenancy if the rent is still unpaid.

I am a student landlord. My tenant's university has contacted me to ask that I waive rent payments or allow for early surrender where students have returned to their family home. Am I required to do this?

You are encouraged to be flexible where possible with your tenants, but you are not obligated to accept surrender, or waive rent payments if you are not in a position to do so.

As with other tenants, where your student tenant's finances have not been affected by the coronavirus they are still expected to pay the rent in full in accordance with Government guidance.

The Student Loan Company has confirmed that all loan payments will continue in full so students are not automatically affected financially by the coronavirus.

In addition to this, on 2 February 2021 the government announced that a further £50 million in hardship funding will be made available to students impacted by the coronavirus. This money will be distributed directly to universities and the Government is encouraging students affected by covid to contact their university for financial support.