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Mortgage holiday vs rental holiday (and what if you don't have a mortgage!)


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I'm assuming tenants are anticipating some kind of 'break' on their rent - maybe not unreasonably considering what the govt has been saying and the fact this is an extraordinary situation - and I'm considering being proactive about this. I have good tenants who I want to keep and one is coming up for renewal soon.

I don't have a mortgage so any 'holiday' is irrelevant to me but as an aside I think a mortgage holiday and a rental holiday seem to be very different things. If I understand a mortgage holiday it means you don't pay interest for three months and the deferred amount is added to your loan. Perhaps the term is increased too. So no immediate hit when the deferred period ends. A rental holiday suggests no rent is paid for three months but then the deferred rent is due, when.....? Well, presumably it has to be paid at some point during the remainder of the term which would normally mean within a year. That's potentially quite a burden for tenants particularly if they've been out of work or not paid for some period.

So with this background I'd appreciate your thoughts on:

- Is it a good idea to approach tenants proactively or wait for them to raise an issue?

- If I help them is it better to defer X months rent that has to be repaid at the end of that period or perhaps spread equally over the remainder of the term? Or reduce the rent by Y% for X months with no repayment as a one off help? Or reduce the rent by a lower amount for the remainder of the term?

I know for a landlord this is a business decision but for many tenants faced with less or no income this could be critical and lead to them losing their homes. So we're all having to make sacrifices and support each other if we're to get through this.

Thoughts?

 

 

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I have had my first tenant flag a potential problem and ask for a rent cut. I have an agent so I have told them to contact the agent. I am happy to offer a rent holiday but have suggested to the agent that the tenant needs to pay what they can so that the debt that accrues is manageable once things return to normal. As it stands I expect rent from the holiday to be spread over 6 - 12 months after the crisis has passed. At that point I will also take a decision on whether to waived some or all of the rent.

I have also reassured the tenant that I will work with them & they will not lose their home.

It is great that the Govt has announce all this support for business & individuals & that tenants & mortgage holders get a holiday - but there is no financial support for LLs in all of this and many of us cannot afford to carry the debt.

It is for each LL to work with their tenant to come to a mutually acceptable arrangement. I think reassuring your tenant they will not lose their home (you can't evict them at the moment anyway) goes a long way to relieving the stress of reduced income.

When we come out the other side it may be a very different world we live in. Renting does not look such a great lifestyle now and being a LL comes with its problems too!

Good luck everyone and Be Kind :) 

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