Since the spring, most Harborne tenants and buy-to-let landlords have been protected from the coronavirus crisis thanks to the banks with their mortgage payment holidays and job support schemes.

 

Before the second lockdown was announced on the 31^st October, it was expected that as the furlough and mortgage payment holidays were due to end on Halloween, there would be some serious fallout from those schemes finishing. One silver lining from the lockdown (if you can call it that) is that mortgage payment holidays and furlough have been extended, yet does all that just kick the can down the road?

 

The question is, what can Harborne landlords do to mitigate the financial risk on their Harborne buy-to-let investment?

 

1.    Help Your Harborne Tenants Get the Financial Support They are Entitled To 

Billions of pounds are being spent by the Government to help those people whose income has been hit by coronavirus. The better Harborne letting agents and self-managing landlords are supporting, guiding and helping those Harborne tenants in financial difficulty to gain a better understanding of the Universal Credit (UC) processes, systems and payment levels, to enable their tenants to pay the rent and ultimately indirectly help their Harborne landlord. Also, if you are a Harborne tenant, and that support isn’t given when you ask, don’t forget Birmingham City Council do hold special cash reserves for discretionary housing payments, which can be utilised to close the gap in rent between what UC pays and your current rental commitments. Also, the Government’s Money Advice Service & Citizens Advice are a good online resource for you to find out what you are entitled to.

 

2.    Adopting, Adapting & Improving Your Harborne Buy-to-Let Property

Demand for gardens or office space means Harborne landlords will need to think outside the box. Those Harborne homes with tenants sharing (e.g. HMO’s and shared houses) might need to price their pre-coronavirus 4 bed sharing house to maybe a 3 bed sharing house plus a work/office room and, if you haven’t already, installing a top of the range, fast and dependable internet connection could be the thing that swings it. Outdoor space and gardens are really high on Harborne housebound tenant’s wish lists, in fact I have come across some Harborne tenants demanding that new rental properties have a landscaped garden or those that bought a dog or cat for company during the first lockdown, are looking for their Harborne landlords to relax their ‘no pets policy’.

 

3.    Hold On to Your Good Harborne Tenants

Those Harborne buy-to-let landlords with decent tenants, who find themselves in financial dire straits should consider attempting to keep them, even if their own monetary circumstances mean they have to decrease their rent somewhat over the short term. Now of course, I would expect that tenants need to prove their circumstances, yet if their plight was real, surely it would be a wise choice to reduce the rent by perhaps £50 a month and support your tenants? You know they are taking great care of your Harborne rental property and rather than risk the issue of advertising your empty buy-to-let property - particularly when there is no assurance you will achieve your existing rent and ultimately risk drawn-out void periods with no rent coming in at all. What I would suggest therefore,  in such circumstances, is that you create a new Assured Shorthold Tenancy agreement with a longer term with your existing tenant at a lower rent – a temporary measure but with peace of mind for both parties which can then be reviewed once that tenancy is up for renewal.

 

4.    Carry Out Firmer Checks on Your Prospective Harborne Tenants 

Many private Harborne landlords and a few slipshod Harborne letting agents tenant checks are somewhat lacking in their depth. Trust me, there is tenant referencing … and then there is ‘proper’ forensic tenant referencing. As certain parts of the British economy have been hit harder than others, Harborne landlords must consider when choosing their new Harborne tenants, the type of work they do or who their Harborne employer may be, to enable them to decide on their future capacity to meet their rental commitments.

 

5.    Rent Guarantee Insurance for your Harborne Rental 

There are still insurance companies offering landlord rent guarantee insurance if your tenants become unable to pay the rent. Many insurance firms removed these insurance products in the first lockdown, yet some have returned to the insurance market although insurance premiums have gone up in price. Remember to check the small print of the insurance, although you will get a lower insurance premium if you can show stringent tenant referencing (as per the previous point). 

Harborne landlords need to be conscious that, should their tenancy run into trouble, the Government have changed the rules when it comes to eviction during the coronavirus pandemic. Going into the first lockdown, there was already a backlog in the courts and now, just before going into the second lockdown, bailiffs have been instructed not to enter rental properties in high risk Tier-2 and Tier-3 Covid-19 areas.

 

Eviction really does have to be the very last option. Negotiation or arbitration will nearly always deliver quicker and improved outcomes for both parties. Harborne landlords who do come to mutually agreeable arrangements with their Harborne tenants by briefly reducing the rent, or allowing payment holidays with legally enforceable pay back schedules should ensure they get the agreed terms in writing and run by a solicitor or their agent (feel free to drop me a note if you need advice).

 

However, if eviction is required, it doesn’t mean the tenant gets off ‘scot free’. Evicted tenants, depending on their circumstances, will either be placed temporarily into an inexpensive B&B, asked to move in with family or given one of the local authorities temporary accommodation properties, with the goal to then move them into long term council accommodation (as the chances of obtaining private rented accommodation would be slim with agent’s heightened reference checks – more of that at the end).

What that would be now is be anyone’s guess – yet it could be a lot more.

 

This is why it is so important to get the best tenant from day one. Many Harborne tenants, who know they wouldn’t pass the references of letting agents, are attracted to those private landlords who don’t use a letting agency, as they know their referencing checks are not as strict and may be a softer touch. That’s not to say going with a letting agent is a guarantee you won’t need to evict; it just means the chances are much, much smaller. Like anything in life - it’s a choice.

 

Whether you are a Harborne landlord who uses a letting agent or not, and feels their reference checks are not to the standard or level you might hope or if you just want a chat about the best rental guarantee insurance, then give me a call what have you got to lose?