Covid-19 changed the world as we know it! Countries went under lockdown for months on end. In the UK, three stages of lockdowns severely impacted the economy as a whole. From multinational corporations to small businesses, almost every business and every industry were majorly affected by the lockdown. The real estate industry took a big hit, as the government banned any sort of sale or purchase of real estate during the first lockdown. Not only real estate agents but also buyers, sellers, landlords and tenants were impacted. As the lockdowns continued, the bans and regulations did ease-out, but not completely. The landlords and tenants in central London, including the estate agents in Shrewsbury, everyone suffered! Here is everything you need to know about the impact of a lockdown on the landlords and tenants in the UK.
Landlords and rental income
During the lockdown, landlords were not required to waive the rent. At least, there was no legal obligation for them to do so. However, landlords were encouraged to come to a mutually beneficial agreement with their tenants to chalk out alternative payment terms if their tenant was unable to pay the rent on time. Since businesses were shutting down, companies started firing people, and unemployment rose during the lockdown. There were quite a few tenants who were unable to pay their rent on time.
Tenants and rentals
During the unprecedented times of Covid-19, many people were losing their jobs. Some were facing salary cuts, while some were getting delayed salaries. So, it was understandable when tenants were unable to pay their landlord on time. However, in most cases, the best-case scenario was when the tenant and landlord came to find a deferred payment option. In some cases, landlords allow tenants to defer the rent payment. Usually, tenants have to pay a specific rate of interest as a late payment fee, which is agreed upon by both parties.
Landlords and notice periods
During the first lockdown and up until 30th September 2020, landlords were required to give tenants at least a three month notice period if they wanted them to vacate the premises. Since many tenants were unable to pay their rent due to job loss, salary cuts and an overall lack of savings, landlords had no option but to send eviction notices to such tenants. However, it is the landlord who suffered as they were unable to collect rent. Also, finding new tenants during this uncertain time of Covid-19 is never an easy task, and the landlords faced the brunt of it.
Tenants and notice periods
While tenants are not legally allowed to without rental payments during the notice period, in these difficult times, it would be quite understandable if some tenants did not have the means to make these payments. However, the legal obligation of paying the rental during the notice period is usually mentioned in the contract. In the terms and conditions of the agreement, it will be clearly stated if the tenant is legally obligated to pay the rent or withhold the rent payment during the notice period.
According to a survey by Barrows and Forrester, it was found that only 18 per cent of tenants struggled to pay their rent, while 46 per cent of tenants felt that their financial situation did not worsen. On the other hand, around 23 per cent of landlords said that their rental income levels dropped.
In conclusion, it seems that most landlords and tenants chose to work together to pass through these difficult times with ease. As for tenants and landlords that might have needed additional support, they opted for mortgages and bank loans to fulfil their financial requirements. But as the pandemic continues to worsen, so will the debt. At the end of the day, it is up to the government to understand the crisis that tenants and landlords face and create solutions for their problems.