Managing missed rent and payment plans with free templates
22 April 2020
Covid-19 could affect the ability of some tenants to pay their rent. We’ve put together a guide to help you manage this scenario, from assessing your tenants' financial situation to arranging a payment plan, including free templates.
The coronavirus pandemic has put unprecedented levels of financial pressure on a huge proportion of people around the country. Letting agents, landlords, and tenants alike are concerned that this could affect the ability of some tenants to pay their rent during this time. We’ve outlined some of the steps you can take to manage this scenario, which includes downloadable and editable templates that you can use in your communications with your tenants and landlords.
Firstly though, it’s important to note that tenants are still liable for their rent payments under the Coronavirus Act, however, the government is encouraging landlords to “offer support and understanding to tenants who may start to see their income fluctuate” in their guidance. Similarly, it has advised tenants who think they will be unable to pay their rent “to talk to their landlord at the earliest opportunity”.
Reach out to your tenants and get an understanding of their financial situation
A good relationship with your tenants is going to be more important than ever if you have to manage a situation where they can’t pay part or all of their rent. If you haven’t already done so, make sure you reach out to all of your tenants, let them know that you’re there to help, and ask them to get in touch with you soon as possible if they think they will have difficulty paying their rent. If any of your tenants indicate that they think paying rent could become an issue, follow up by sending them a rent relief questionnaire to get a better understanding of their current financial situation. This information will give you the best opportunity to build a viable payment plan together if needed, as well as providing you with evidence that you took steps early to help your tenants.
Help your tenants take steps to obtain viable financial assistance
Your tenants might be able to access other financial support before it’s necessary to arrange a rent payment plan with them, which means it’s important that you have a good understanding of the government support that’s in place so you can show them other ways to get help. Some tenants’ employers may not yet be making use of the coronavirus the Coronavirus Job Retention Scheme to help them pay wages and the government is encouraging workers to check if their employers can use it.
Those whose salaries have been reduced because they have been furloughed could be eligible for Universal Credit. If your tenants are unable to work because they are isolating and are not covered by their employer’s sick pay, they could still be eligible for Statutory Sick Pay (SSP), which covers every day that they’re in isolation. Other options include the ‘new style’ Jobseeker’s Allowance and the ‘new style’ Employment and Support Allowance, for those who have a disability or health condition that affects how much they can work. Both of these can be applied for online.
Arrange and agree to a rent payment plan
If you’ve done everything you can to understand your tenants’ financial situation and show them where they can get financial assistance and they’re still unable to pay part or all of their rent, you will need to take steps to arrange and agree to a payment plan with them. The government’s guidance suggests that payment plans could include “reaching a temporary agreement not to seek possession action for a period of time and instead accept a lower level of rent, or agree to a plan to pay off arrears at a later date”. It’s important that you make sure that your tenants understand their liabilities before they agree to a payment plan to ensure that the plan is a realistic one, which is why engaging with them as early as possible and getting a good understanding of their financial situation as soon as you can is vital.
Oh Goodlord Limited is an Appointed Representative of Goodlord Protect Limited for general insurance products and credit broking. Goodlord Protect Limited is directly authorised by the Financial Conduct Authority, registration number 836727. You can check this information on the Financial Services Register by visiting www.fca.org.uk/register or by telephoning 0800 111 6768 (Freephone) or 0300 500 8082 from the UK. The FCA is the independent watchdog that regulates financial services.