Coronavirus - Accessing Financial Support

Last updated 2 February 2021 - hardship fund for students

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.

So far, no further financial support package has been announced to assist tenants directly but this may change in the coming weeks. This guidance will be updated further if any further financial support is announced. 

What is our position on this?

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

  1. 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.
  2. 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.

  3. Keeping LHA at 30th percentile at the minimum – and ideally raise it to cover median market rents – to help ensure tenancies can be sustained.

  4. 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?

As part of the Government’s response to the coronavirus emergency, lenders have agreed to allow people with buy to let mortgages to apply for a mortgage holiday of up to six months.

For the duration of this period you will not have to make your scheduled mortgage payments. However, interest will continue to accrue and as a result you should expect to make higher payments afterwards.

When can I apply for a mortgage holiday?

Until 31 October 2020, landlords were able to apply for a mortgage holiday if their tenant's finances have been affected the coronavirus pandemic.

This has now been extended and mortgagors have until 31 March 2021 to apply for a mortgage holiday. Mortgagors can only apply for a maximum holiday of 6 months even after this extension.

If the borrower makes their first application for a mortgage holiday between now and 31 March 2021 then they can also extend this mortgage holiday for a further three months provided it continues on from the original mortgage holiday.

My tenant has been affected by the coronavirus. What should I do?

UK Finance recommend you contact your lender to discuss your options as soon as possible.

What are the criteria for applying for the mortgage holiday?

For buy to let landlords the key requirement is that their tenant must have been directly or indirectly affected by the coronavirus.

The second essential requirement is that you must be up to date on your current mortgage payments.

I was experiencing financial difficulties prior to the coronavirus impact will I qualify for the holiday?

Mortgage holidays are only available to people who are up to date with their payments.

However, from 19 March 2020 mortgage lenders agreed to suspend all possession actions against borrowers. This was originally for 90 days but was then extended until 31 October 2020.

This has now been extended again. Borrowers have until March 31 2021 to apply for a mortgage holiday. 

How do I establish my tenant has been impacted by coronavirus?

Mortgage lenders have agreed that landlords may contact their lender to self-certify that their tenant has been impacted. This done on the understanding this mortgage holiday will be passed down to their tenants.

What happens at the end of the mortgage holiday?

While payments are suspended for the duration of the mortgage holiday interest will continue to accrue on the mortgage and those mortgage payments will eventually have to be made up. Your mortgage lender will be able to discuss options with you to help repay the additional interest accrued.

Will my credit rating be affected if I take 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.

Will my rent insurance provide cover during this period?

You should contact your insurance provider as you may not be covered for this specific situation.

What if I have reached my mortgage holiday limit?

For those who have reached the six month limit, the Financial Conduct Authority (FCA) has advised mortgage providers to offer a range of tailored support options if it is not possible to resume payments after a mortgage holiday. This can include options like deferral or a reduction in payments depending on your circumstances. 

Unlike the mortgage holidays however, this tailored support will be included in your credit history and many landlords will be understandably wary of applying for further support unless it is impossible to meet the payments themselves.

If you do need to access further support then your mortgage provider should contact you prior to your mortgage holiday ending to discuss your options with you.

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. 

While most of these measures were expected to come to an end in October, the Government has extended the financial support, with some changes, in light of the increasing rate of infection across the country.

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 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.

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 the end of April 2021, employers can access a grant from HMRC that covers 80% of salary (up to a maximum of £2,500 a month) for each employee to ensure their job is retained. This Coronavirus Job Retention Scheme, or furlough scheme, offers the grants on the proviso the employer does not the employee redundant. 

This scheme was originally set to end in October 2020 and be replaced by a more restrictive scheme. However, as of 5 November, the Chancellor has announced this will be extended. Former employees who were made redundant on or after 24 September can be rehired and furloughed under this new scheme.

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 whether they will be able to pay the rent from November. 

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?

For the period covering 1 November - 31 January 2021, self-employed tenants are able to apply for a grant covering the period from November 2020 to January 2021. This was originally set to be worth the equivalent of 55% of trading profits up to a maximum of £5,160. As of 5 November this grant has now been increased and will be worth the equivalent of 80% of trading profits up to a maximum of £7,500.

Tenants can apply from 30 November for this grant provided they meet the conditions for this grant which means they must:

  • have been previously eligible for the Self-Employment Income Support Scheme first and second grant (although they do not have to have claimed the previous grants)
  • declare that 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 fourth grant covering the period February to April 2021 has also been announced with more details on it available closer to the application date for this grant.

Do landlords qualify for the Self-employment Income Support Scheme?

It is understood that landlords will generally not qualify for this scheme. The NRLA is calling for further additional financial support for landlords to assist them at this time.

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

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. 

This support was originally set to end on 31 October but the FCA has now proposed extending support until the end of January 2021.

Under these proposals borrowers will be able to apply for -

  • two payment holidays totalling six months if a previous holiday has not been arranged
  • three months if a previous holiday had been arranged

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. A number of emergency measures have been put in place to ensure that vulnerable tenants will not have their utilities suspended during this period.

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.

Is any further financial support planned for tenants?

On 22 May the Housing, Communities and Local Government Committee published a report recommending that the Local Housing Allowance (LHA) rates be kept at the 30th percentile long term. They also recommended that the Government look into what impact would be had if the rate was raised further.

The report also suggested investigating whether interest-free loans should be made available to tenants to support them through the crisis. This ‘Spanish loans’ option was not recommended in the latest report but the committee is investigating this and other options for managing arrears.

The NRLA welcomes this recommendation as we have continuously made the case that the best way of sustaining tenancies long term is to  ensure tenants can pay their rent and avoid falling into debt.

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.