Tenants during Lockdown

The UK government has announced radical measures to protect renters and landlords affected by the covid-19 situation.

From tenants perspective:
• Emergency legislation to suspend new evictions from social or private rented accommodation while this national emergency is taking place.
• No further possession proceedings through applications to the court to start during the crisis.

From Landlords perspective:
• If the tenant is in financial difficulty, as a landlord, it only makes sense to work with tenant on possible options.
• We secure a written application for rent arrears from the tenant with details that show that they are in financial difficulties. You will need to know the circumstances if you need to contact your lender to discuss mortgage payment holiday. [Enter your details in the contact box at the bottom of the page if you would like to know more]
• We ensure that tenant understands that any rent arrears will need to be paid back in full at an agreed time in the future
• We provide the tenant with all the information about all the financial support options that the government is arranging by providing a regular newsletter by email [Enter your details if you would like to know more]

Conclusion

It is an unprecedented situation for all of us. Importantly stay safe and stay healthy. The UK government have taken quite a few steps to help businesses, tenants and landlords. The current COVID-19 situation is not permanent. The UK Property Market is resilient and will spring back in due course.

What we’re facing is daunting, but I am heartened by the moments of triumph in everyday acts of courage, humanity and love. Although these are trying times for us all, I remain optimistic that our world will thrive once again.


Property Management under Lockdown

In common with most letting agents, the one I work with is working from home.

“I am fortunate as I have an excellent Lettings Manager and on 19th March we discussed the risks associated with each tenant and the property they occupy.
I now manage a risk register [Enter your details if you would like to know more] which is reviewed weekly to keep an overview of the tenants at risk of catching COVID-19, mostly low risk however some tenants have a higher risk of infection as they work for the NHS and a few are Care Workers.

We also evaluate the risk of their inability to pay their monthly rent. We work together to compose a periodic email which keeps all tenants informed and provides them with supporting information. If their circumstances are such that they are no longer able to pay their monthly rent, then they use a form we devised to apply for rent arrears, then we can consider how best to support them. Key points for me are: –

1. So far, none of my tenants have been infected by the COVID-19 Virus.
2. I have only one vacant property and can undertake viewings by video when needed.
3. There are no significant repairs or maintenance to undertake on any property in the portfolios.
4. Urgent Safety checks can still continue provided we put in place the necessary controls.
5. Several properties are tenanted by families already in receipt of benefits and their ability to pay their rent is unchanged.

Up until now, the property portfolios have remained unchanged and tenants have given assurances that they will pay their rent on time and have been given the opportunity to apply for rent arrears if their personal situation changes.

Some would say I am in a very fortunate position right now, however I would say that my letting agent is highly skilled, experienced, and proactive. No doubt we will need to keep informed and adapt as the situation evolves. In addition, I have always had a strategic long term approach to my property investments as follows: –

• Always investing in areas of high demand
• Tenants have been selected well; they are long term tenants who live close to relatives and friends and take pride in their homes
• We deal with urgent tenant issues swiftly (mostly within 1-2 days)
• We undertake quarterly inspections and ask our tenants to complete customer satisfaction questionnaires to inform our processes for continuous improvements
• The refurbishments are undertaken using good materials by skilled tradesmen so we deliver an excellent home which requires low maintenance in the longer term. (The standard is such that I would be happy for me or members of my family to live in any property within the portfolios.)”


Investment Property: Work in Progress

Many of the estate agencies that I know with have begun working from home so all the deals in progress at this point are either on hold or moving very slowly. Most property viewings have been suspended a few are continuing via video call.

Government guidance is that there is no need to withdraw from transactions but be flexible with the dates and avoid relocating in the lockdown period if possible.

“I’m finding it quite frustrating as we have a key worker, a surgeon currently living in an HMO, already lined up to rent a property that’s being refurbishing at the moment. As the Project Manager, I have ordered the vast majority of the materials in readiness for the contractors to start work. However, the lockdown means that it is safer for the contractors to stop work and the owners took the inevitable decision to halt the process whilst we review the potential for small teams to slowly resume work on segregated parts of the property.”


Current conditions within the UK

The Financial Conduct Authority (FCA) has issued guidance on how mortgage lenders and administrators should treat customers fairly in accordance with policies announced by the government to support mortgage holders (and renters) and the assistance being provided for furloughed employees and the self-employed.

Lenders who are regulated by FCA have interpreted the guidance and are acting accordingly. However, other lenders who are not FCA regulated (e.g. few small bridging companies) may choose not to follow the guidance.

A Mortgage Payment holiday is a measure announced by the government for struggling landlords. However, a mortgage payment holiday is merely a postponement. If a landlord chooses to use mortgage payment holiday, they should expect both interest and capital payable to be added to the loan.

“I always recommend that landlords check the full details with their lenders and reach agreement with them before proceeding.”

“In March, I checked with one of my lenders, after I explained the individual tenant’s circumstances and my own, they agreed that I met their criteria and would allow me payment holiday. So, for one of my mortgages they will suspend the Direct Debit for 3 months from May. When they resume, the monthly payment will have increased and the term of my loan will be extended by three months.

Soon I will be able to support the tenant with an agreed amount of rent arrears whilst they experience financial difficulties and are unable to make the monthly rental payments.

My view:
If I can, I will continue to make the full payments on all my other mortgages and avoid any more payment holidays for two main reasons:
1. When I stop paying each month, my loan is increasing leading to higher payments later.
2. Although they say that my credit file will not be affected, it may be noted and adversely affect my future applications for mortgages, loans and credit cards.”

New Mortgage Applications

Given the uncertainty in the market, some lenders have removed products higher than 80% Loan to value.

“I have three mortgage applications in process at the moment with two different lenders and my Broker has confirmed that some 80% LTV products have been withdrawn and that I am lucky that those that I have applied for will still go through, albeit at a much slower pace.

The delays are the result of the individuals such as Solicitors, Valuers, Lenders and Brokers who normally support the process now being overloaded due to reduced staff, working fewer hours or from home. Particularly if documents require ‘wet’ signatures and 3rd party witnesses etc.

Mortgage offers from lenders always have an expiry date, so it is worth checking with your lender or broker to ensure it is still valid.”

Some lenders have stopped new mortgages temporarily due to:
1. Shortage of staff.
2. Staff reallocated to handle mortgage holiday applications.
3. Holding off until the property market settles again, e.g. small bridging companies

A few bridging companies are still providing loans, however they are evaluating the risks and offering products with higher interest rates.

Interest Rates

“Although the Bank of England has revised the base rate to 0.1% which is intended to help struggling businesses and individual investors and some banks have already reduced the monthly interest charged, I expect it may take some time for this base rate to be adopted into mortgage products.

I will welcome the rate reductions within mortgages and loans, however I will also see reduction within my savings interest as well.”

Property Tax, Reliefs and Grants

There are quite a few financial schemes available for employees and employers that can support Tenants and Landlords in this challenging situation. Employees or employers could be tenants who are finding it difficult to pay rent or landlords who are finding it difficult to pay mortgages.

Having information about these schemes can help explore options.

Coronavirus Job Retention Scheme (CJRS)

CJRS is a UK grant, that chancellor has announced to cover the wages of employees who are placed on temporary leave. As it is a grant, it will not need to be paid back again.

CJRS is applicable only for employers who are paying their employees through PAYE. It can be backdated till 1st March 2020 if needed.

The employer would be able to apply for a grant from HMRC for 80% of furloughed workers wage or salary costs including national insurance contributions. The grant is limited to a maximum of £2,500 per month for each qualifying employee.

“It is generally expected that employers pass this on to their employees, however there is no legal obligation to do so and some cynical friends of mine suspect that struggling businesses will not pass on the full 80% after the first month or two. Let’s hope they are wrong.”

Self Employment Income Support Scheme (SEISS)

SIESS is a grant for self-employed individuals who have lost their income due to lockdown and self-isolation. It is simply a grant so there is no requirement to repay. The self-employed can receive up to 80% of average monthly profits based upon their tax returns from the last three years. It is capped at £2,500, and is taxable income. To be eligible, 50% or more of applicants’ total income must be from self-employment. Applications are made to HMRC, and a lumpsum amount will be paid in June 2020.

There are quite a few other initiatives that UK government has started to help individuals and business to take care of COVID 19 situation. Please investigate all the options you have and see if you are eligible for any financial schemes based on your financial situation.


Covid-19

All over the globe countries are in some form of ‘lockdown’ trying to protect their citizens and we’ve all borne witness as to how this insidious virus is impacting our families, our communities and our very way of life.  

As of the 8th April, the number of people in the world who are confirmed to have been infected totals 1,353,361 and the total number of deaths has reached 79,235 

Governments throughout the world are asking people to stop non-essential travel and work from home as much as possible. Many businesses are now closed or offering reduced levels of service and Governments have been announcing wide ranging economic schemes to support individuals and businesses. 

For most countries, the graphs are still showing exponential growth rates and there will be special measures in place and further changes to government policies for months to come.   

In the United Kingdom the number of confirmed Coronavirus (COVID-19) cases has reached 60,733 since the virus was first detected in the country in Feb. 2020. According to data from geographic information system ArcGIS, there have been 7,097 reported deaths with the virus (April 8) 


Looking back at 2019…

Looking back at 2019 I started the year as a pensioner, retired and enjoying an active social life including lots of dancing and catching up with friends whilst watching lots of live music.

2018 had been the year when I reached the ripe old age of 65 and qualified for my state pension.  I was a little unsure of what to do and decided to heed my son’s advice when he said “just ‘kick back’ Dad and take it easy for a while.”  Well I did that, I had a little bit of a ‘GAP year’ with plenty of travelling in 2018.  I didn’t completely relax though; I was still running a couple of businesses each with small property portfolios to manage and as the year ended, I was busy preparing one property ready for sale as a flip.

The pivot point…

At the end of January my life changed when I was challenged during a training course for property investors to establish for myself what I wanted to do with my life and more importantly, why…

Working out our personal goals and the reasons why they mean so much to us as individuals is really important for us to define and yet we rarely spend any time to sit down and focus on the vital driving force that directs our lives that is our WHY.

I realised that I hadn’t come this far with my life, to only get this far; now I had the chance to direct my knowledge and experience towards creating a better legacy for my children and my grandchildren.

It was at this point that I decided to set down a set of new objectives and my motivational reasons why.  This helped me decide to embark upon more training courses aimed at helping property investors succeed with a variety of strategies and techniques.   Looking back at the year I see that I have invested in over 43 days of training/seminars and have been mentored and coached by some of the leading players in the UK property marketplace to set me on the right track for 2020.

Coming soon…the next installment of looking back on 2019.


A networking lesson from Maz…

I’ve always enjoyed talking to people, learning about their business and sharing ideas.  Last year I shared my story at a networking event when I was then approached by an IT specialist whose father in law was selling some land.  Was this something I could help with.

So I visited the potential client, who owned a small farm with almost 2 acres of land that he wanted to sell.

I evaluated the potential with the support of key contacts from my network:

2 Architects

2 Solicitors

1 Accountant

1 Commercial Banker

After planning permission was granted for two houses.  I introduced some buyers for the self-build plots.  But the client explained he’d found a buyer, which was great news for the land.

Last week I made a follow up call, arranged to meet the client again and listen to his story.  He told me that the potential buyers came 5 times promising to buy all of the plots but then walked away leaving Arnold with the land still.

The opportunity is now back with me again so I’m excited to tell everyone I meet that I’m looking for an investor who can develop 2 houses with a GDV of almost £1m which can make over £200k profit!

Lessons learnt:

  • Tell everyone you meet what you do
  • Be prepared to listen and learn
  • Share your knowledge – be helpful!
  • Always follow up

Our very own Maz wanted to share his story on how to he found his best builder….

“My worst builder…the roof contractor started off really well and did a good job with the flat roof and the tiled roof but disappeared onto another job never to be seen again!! So a builder with lots of experience was brought in to finish the roofing and refurbish a property I had bought at auction for £50k.  Damp walls needed treating and a new bathroom, with a lot of plastering jobs to be done too, plenty of decorating, a new boiler and all the doors replacing along with new carpets.

The work seemed slow at first, it then picked up some momentum then almost stopped, so the job ended up running behind schedule.  The arrangement was that I’d already nominated the carpet provider and all the builder needed to do was make the arrangements for the fitters when the work was completed.  My letting agent had secured the tenant and all seemed to be on track for the agreed move in date.

Then I got a call from the carpet guy who was quite fed up because when his team arrived on site the property was not finished & the fitters could not proceed.  They delivered the carpet rolls and had to leave them until the builders finished off.  They returned to fit the carpet after the tenant had moved in…. the builder then disappeared completely leaving devastation in his wake.

I went to see the reliable carpet guy at his store and berated the builder saying he’s always messing us around and proceeded to tell me about other occasions when his team had to ‘stand down’ because the builder was not finished or property still being worked on!  He said he’d never supply carpets to a property the builder was involved with.

Then the light bulb moment occurred…I asked the carpet guy if he could recommend a reliable builder.  “Of course” he said, “try Peter, I’ll give you his number”.  On the back of this recommendation I gave Peter the next property to quote and gave him the contract to refurbish.  That job went really well and the finish was excellent, the carpets went down exactly to plan!

That was the start of a series of 8 refurbishments one after another and kept Peter busy for almost 18 months.

The start of a lasting ‘partnership’ which continues to date.

Learning point from this story…reverse engineer your solutions.  Engage the carpet contractor first and they’ll recommend a reliable builder (and keep you clear of the bad ones).