The Coronavirus pandemic has had a major impact on the residential rental system, with many tenants struggling to pay rent. In the UK, people are now navigating uncertain circumstances, having to renegotiate terms and even consider a new place to stay. At the same time, landlords are taking a hit too.
While efforts are being made to support tenants throughout the UK, landlords are often placed in an even more vulnerable position and, for them, the impact could be even bigger. Landlords have bills to pay too, and those who have lost their jobs during the pandemic rely on rental properties to make a living.
Cash flow is the primary source of problems.
The coronavirus crisis hit UK homeowners hard. Statistically, 4.5 million families live in private rented accommodation, and six out of ten renters said that they were financially affected by the forced lockdown. Out of those, one in five said that they had to choose between paying rent or buying food for their families.
It’s a decision that no one should have to take, and the good news is that both the Government and the vast majority of landlords have been proactive about this. As per the latest package of measures, renters cannot be evicted out of their homes during the crisis and landlords must serve three months’ notice before seeking possession of their properties.
And yet, complying with these measures brings an inevitable cash flow fluctuation. If large real estate developers can cope with the financial repercussions of the Coronavirus, things are much harder for “mom and dad” landlords, who couldn’t possibly have prepared for this.
In times of crisis, landlords, just as tenants, can take many bad decisions that may seem like quick fixes at that moment but can cause more problems in the long run, including:
- Breaking social distancing rules to find other jobs, thus increasing the risk of contracting the virus. Seeking landlord tax relief can be a better option, so talk to your local authorities to find out what options are available.
- Cancelling landlord insurance under the false belief that it helps you save money. While it may appear to do that in the short term, lack of insurance can cause more problems in the long run. Instead of giving up coverage, compare landlord insurance quotes from multiple companies. Things may have changed since you bought insurance for the first time, and there may now be cheaper options available so that you don’t make an unpleasant compromise.
Old management methods show signs of weakness
Despite increased awareness on digital tools, many British landlords have insisted on sticking to old and outdated property management methods, such as keeping only written records of tenants or meeting with the tenants personally to pick up the rent money.
These old methods waste time, money, and energy, and they’re highly inaccurate. They leave a lot of room for human error, and even before the pandemic started, landlords were advised to move on to new digital tools.
Automated rent collection, scheduling property maintenance and inspection, managing finances, all these things can be done easier thanks to dedicated apps and those who refused to implement them before the Coronavirus may now have to go through a forced adoption process. Meeting face to face with tenants for tasks that can easily be automated is no longer acceptable.
Tenants spending more time at home could bring more responsibilities for landlords
In the UK, work-from-home rates have reached an all-time high and overall, so has the total time that people spend at home in self-isolation. As people are confined to their homes, often with small children, the rate of technical breakdowns will increase, and landlords will have to worry a lot more about repairs.
Again, is this an area where landlord insurance can make a huge difference. Having to pay from your own pocket to repair a broken window or an electric malfunction when you’re already low on cash isn’t an exciting prospect, so this might be a good time to go over your current plan and see if you can get any extra coverage.
This is a very bad time for a pipe to burst open or for the central heating system to stop working, but you can’t ignore the risk either. Stay prepared and double-check your list of contractors to find out what their policies are during the pandemic and how quickly they can help you during emergencies.
Communication is more important than ever
Renting properties is a business and, like in any business, the relationship that landlords have with their tenants can dictate their success. Experts are already talking about the long-term impact of business decisions taken during the pandemic, and it would be wrong for landlords to assume that this impact doesn’t apply to them.
On the contrary, the way landlords handle this crisis will define their personal brand for years to come. When the pandemic is eventually over, tenants will remember how they were treated and will make decisions accordingly. Landlords who refused to comply with Government regulations and pressured tenants into paying rent even if they lost their only source of income will face the consequences.
Not only can tenants choose to take legal action, but they may decide not to renew their contracts. The same applies to landlords who refused to communicate transparently or even downright ignored tenant concerns regarding repairs or rent payments.
Now more than ever, it’s essential for landlords to have a good relationship with their tenants, as this will strengthen their business in the post-pandemic landscape:
- Communicate with tenants, explaining what health & safety measures you will take and how the Coronavirus changes their financial responsibilities
- Talk via video calls when possible to reduce the risk of contamination.
- Assure them you will undertake maintenance and repair work as usual.
- Do not threaten tenants with eviction if they lost their jobs and are unable to pay rent.
- Allow your clients to pay rent by credit card.
For many landlords in the UK, the Coronavirus pandemic will be their first real test. Showing humanity and being able to adapt will only lead to good things, whereas taking rash decisions and disrespecting tenants will not go unpunished.