A landlord's guide to agreeing rent changes with your tenants - Foxtons Blog & News
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A landlord's guide to agreeing rent changes with your tenants
Since the start of the pandemic there have been a growing number of tenants who have fallen into difficulties with their rental obligations. This is understandable due to the volume of renters who have been furloughed, lost their job, or have been ill or isolating and unfortunately unable to work. We have received numerous queries from our landlords asking what they should be doing in these circumstances. Our landlords have been incredibly understanding at this difficult time but are naturally also concerned about their own financial position. Please find below some tips about negotiating a new rental agreement.
You may want to explore the tenants’ personal circumstances as these will vary. Start with an honest dialogue with your tenants to assess their current financial position. Likewise, be honest with your financial position too. Please be aware that due to the nature of some industries, such as hospitality, it can be difficult for a tenant to provide written evidence of a job loss, or salary reduction.
Based on your personal finances, you need to decide if you want to negotiate;
A rent reduction where you agree to accept a lower rent for a specific period of time and the amount it is reduced by will not be payable by the tenant in the future
A payment plan where you agree to accept a lower amount of rent temporarily, on the understanding the amount it is reduced by will be payable at some point in the future. This could be managed by agreeing a rent increase in the future to repay the shortfall.
Finally, please ensure that any amendment to rental arrangements are documented by simply completing the rental changes form available on your My Foxtons account. It is vital that both parties consent to the revised payment terms to avoid any confusion arising in the future. Precise dates and rental amounts should be clearly set out in any agreement made.
What if I do not want to accept a rental reduction?
Whilst it is best to keep the rent flowing, your own personal financial situation may prevent you from being able to accept a lower level of rent. If you do not accept a tenant’s request for a rent reduction or payment plan, and your tenant falls into significant rent arrears, then you will need to consider the legislative changes made to protect tenants since the Coronavirus crisis commenced.
The notice period from landlord to tenant to terminate an Assured Shorthold Tenancy (the most common type of lettings agreement) without a specific breach of the tenancy, otherwise known as serving a 'section 21' notice, has been extended from 2 to 3 calendar months. These new rules currently apply until 30 September 2020 but could be extended further.
All possession claims or proceedings to enforce a possession order have put on hold, currently until 25th June 2020, therefore it could be some time until you could repossess your property via the courts.
If you would like some advice on how best to look after your interest and those of your tenants at this difficult time, then please get in touch and we would be happy to talk you through your options.