What to do if you are worried about your rent
People and businesses all over the world are being affected by the cost-of-living crisis. Unfortunately, housing is not immune. Here is our 7 step action plan to negotiate conversations around rent.
Evaluate your expenses:
You should know this already but now is a great time to retake stock. In particular what you want to do is work out what is fixed i.e. HAS to be paid and what is variable. Among your fixed costs will be food, mortgage/rent and utility bills i.e. electric, gas, water. Variable costs can include things like gym, pub budget, entertainment subscriptions such as Netflix, Disney+, etc. It is worth getting out your bank statements and looking at your actual spending over the prior 6 months so your review is honest and realistic. Landlord should take into account how much they spend on property maintenance.
Cut costs:
Now is the time to be brutal. Start with your variable costs and cut things you can live without. Some of these will be obvious, with the lock down any money set aside for outdoor activities, parties, gym. Others such as gardening will have to be balanced against your lifestyle. For fixed costs, it's time to negotiate. You might be able to swap energy providers or move to cheaper tariffs. Landlords who need rental licenses may be able to receive extensions from the councils.
Assess your revenue:
Review your employment status and income. Landlords should be proactive, if you have not already heard from your tenants, reach out. Find out how they are doing. Understand what rent is forthcoming and what is under threat. Honesty from both sides here will go a long way. Remember everyone is stressed and anxious about both the present and future. 80% of landlords are employed in other jobs unrelated to being a landlord, your rent may be their only source of income now.
Offer concessions where possible:
Now that you know what your income and expenses are, you know what you can offer. Hopefully your tenants still have jobs and can continue to afford their rent. If not, be as understanding as you would like someone to be with you. If you can, recognize that some tenants will struggle to make to make back payments with either lost or reduced income. If you can afford to show some compassion do so. We’ve heard many stories of awesome landlords who have been able to do this. We may all have to accept lower revenue in 2020. Here are some options.
Universal credit: Tenants may be eligible to claim universal credit. Although it might not cover all of the rent, something is better than nothing. It is even possible to have the money paid directly to landlords.
Rent reductions or holidays: Tenants must recognise however that if you are still in work you must still pay rent. Landlords may be able to receive a 3 month mortgage holiday, however this will increase the amount of their mortgage after the 3 months are up. Be prepared to pay more rent in the future if this option is exercised.
Moving out: Only use this option if you have somewhere safe to go such as moving in with family or friends. Viewings are not advisable at the moment as it is almost impossible to practice social distancing unless the property is empty. If you need to abandon your rental property be honest about it and give as much notice as possible. Landlords need to perform some legal actions if you do this such as getting you to sign an abandonment notice as well as informing their insurance company.
Action urgent repairs:
While we should all certainly be staying at home landlords must still ensure that their homes are safe and comfortable. Therefore, all urgent repairs should be followed through. If you are unable to to access contractors let your tenants know.
Keep records:
Be clear with your communications and follow up with written confirmation. We will all certainly need to take stock of what has transpired once this is over, be sure you are not caught out.
Stay positive:
Stress and anxiety are normal reactions to uncertainty. However, as the saying goes this too will pass. Until then, take care of your mental health, keep in touch with family and friends digitally and most importantly stay home.
If you have any questions, get in touch with Husmus today.