As the country faces the biggest lockdown it has ever experienced, the measures taken against the spread of the coronavirus affect everyone. That extends to the private rented sector, where landlords and tenants are in this together.
The shared interests of landlord and tenant are recognised in an article by the Residential Landlords’ Association (RLA) on the 24th of March 2020. With an ever-present possibility of needing to self-isolate, tenants more than ever need the security of their rented accommodation. For landlords to continue to provide that security of tenure, they in turn need to rely on steady rental income – or suitable financial support.
Financial support for landlords and tenants
The RLA welcomes the steps taken by the government to encourage buy to let mortgage lenders to allow repayment holidays – of up to three months – when landlords experience financial difficulties because their tenants need to self-isolate or have lost their jobs.
In return, landlords should be reasonably expected to grant a rent holiday to any of their tenants who are in financial difficulties because of the coronavirus lockdown.
Tenants have also been granted concessions if a landlord wants to repossess their let property. The period of notice that the landlord must give of any such intention has been extended from two months to three months during the current emergency. The move has not gone down entirely well in all quarters. The Guardian newspaper on the 24th of March, for instance, reported complaints that evictions had not been banned – and tenants have simply been given “longer to pack their bags”.
Tenants on Universal Credit
Tenants who fall sick, have to self-isolate, or lose their jobs will be faced with a raft of financial difficulties, including the payment of rent.
To help them through these difficult times, therefore, the RLA is also asking the government to consider temporarily shelving the current requirement for claimants to wait five weeks before the receipt of their benefits. The first payment should be made far sooner, says the RLA.
Income tax relief on mortgage interest repayments
Since April 2017, income tax relief on mortgage interest repayments has steadily been withdrawn from landlords. With each new tax year, the amount of relief that can be claimed has been lowered. The beginning of this year’s new tax period in April is scheduled to see the relief removed altogether. It will be substituted with a tax credit equivalent to 20% of mortgage interest repayments.
The new tax regime results in many landlords paying considerably more in income tax. Those on higher or additional rates of income tax, for instance, had effectively received 40% or 45% tax relief respectively.
So that at least some landlords continue to receive more of the income they generate from rents, therefore, the RLA has asked the government to temporarily suspend the final stage in the withdrawal of income tax relief on mortgage interest repayments.
Routine inspections of let property
To reduce the risk of spreading coronavirus infections, the RLA is also pressing for a suspension of routine management inspections of let property – including those needed for the licensing of new properties.
Not only should inspections be temporarily suspended, but so too should non-essential building works that are prompted by local authority enforcement action – for the health protection of tenants, landlords, and their contractors.
