What should you do if you are struggling to pay your rent during coronavirus, and how can you get a mortgage holiday? As the government reopens England’s housing market, an expert answers four of the big questions we have around housing during this time.
Update: England’s housing market has reopened from today, 13 May. This means that estate agents have reopened, property viewings can take place and removal firms are running again, meaning that people are now able to move home during lockdown. However, social distancing rules must still be observed. Please note that the property markets in Scotland, Wales and Northern Ireland are still closed, meaning that property viewings are not permitted. Original story continues below.
Throughout the coronavirus pandemic, we’ve been thinking about housing more and more.
The current UK lockdown has thrown a lot of us into an area of financial insecurity, with over 4 million Brits being furloughed (at the time of writing), and countless others losing their jobs.
Unfortunately, a knock-on effect of this is that many of us are struggling to pay our rent or mortgages, while landlords might be finding it difficult to cover costs on their properties.
If you’re in this situation, there is help available. This includes a three-month “mortgage holiday” for homeowners in financial difficulty during the pandemic, and the announcement that landlords have to give all tenants at least three months notice of repossession, protecting both private and social renters from eviction during this time.
Are you looking for advice on housing during the coronavirus pandemic? Below, financial expert Nat Rich answers some of our biggest questions around housing during this time. Nat is a speaker and entrepreneur who is currently helping people navigate their finances during the pandemic through her twice weekly live webinars, Un-F##k Your Money.
Please note that during this time, the government is advising people who wish to move house to take extra precautions, by maintaining social distancing and using virtual viewings where possible. You can read the government’s full advice on moving during the pandemic here.
What should you do about paying rent if you’ve lost your job or been put on furlough?
Call your landlord immediately and explain the situation – don’t wait for them to call you. Be proactive and ask them what their situation is. Although your landlord may have plenty of houses, this does not mean they are cash-rich and have money to burn.
If you decided to leave the property because you couldn’t afford the rent, the chances are it would be very hard for the landlord to replace you, and they would have to foot the cost of the mortgage and the bills themselves. This is a headache for anyone.
Official advice from the government recommends trying to agree a rent payment scheme between you.
For example, if you can afford it, you could offer to pay the lower cost of the mortgage along with continuing to pay the bills. This meets the immediate basic costs for the landlord and could significantly reduce your rent during this time.
This could also save the landlord the hassle of having to find someone else to pay these fees, and it could also give them an idea of how to handle any other properties, in turn helping them save money, too.
Remember that any rent arrears during this time will need to be repaid to your landlord, with the government recommending that landlords and tenants agree on a repayment plan for this.
What should you do if you’re struggling to pay your mortgage?
If you’re struggling to pay your mortgage during the coronavirus pandemic, don’t panic. Homeowners in this situation were addressed by the government last month, when banks agreed with chancellor Rishi Sunak that they would offer “forbearance” (tolerance and help) for those paying mortgages during coronavirus.
This means that those struggling to pay their mortgage can apply for a three-month mortgage holiday (please note that it isn’t compulsory for any bank to offer this). This policy includes buy-to-let mortgages, and landlords who take payment holidays are expected to pass on this relief to their tenants.
Payment holidays are available for homeowners who are worried about their ability to meet their mortgage repayments, for example due to a loss of work or other changes in circumstance. You can apply for the holiday by contacting your lender and self-certifying that your income will be directly or indirectly affected by the coronavirus pandemic.
With paying interest, you’ll still owe the bank the same capital amount as you do now, but interest will continue to accrue on this. This means it will take you longer and cost you a little more to clear your mortgage. With this in mind, if you can, try and continue with your mortgage payments as normal for as long as possible.
It’s best to call your bank or building society to discuss your options during this time, as mortgage holidays are just one option that lenders might offer. For example, some of the following options may be available: To move your mortgage to interest-only payments for a period, to defer your interest payments for a period, to extend your mortgage term (reducing your monthly payments), or to add the deferred payments to the overall amount you owe and spread this over the remaining mortgage term.
At the end of the three-month period, your lender will likely contact you to assess your circumstances and agree on a manageable way for you to make up the deferred payments. Lenders will provide a range of options, which may include extending your mortgage term or altering your monthly payments if it’s affordable to do so.
The latest advice from Money Saving Expert recommends applying for a mortgage holiday online. You can read their guide on this here.
Anyone struggling to pay the interest fees on a Help to Buy equity loan can find advice from the government here.
What should you do if you are landlord?
If you own a property, the likelihood is that you’ll be relying on tenants to cover the cost of your mortgage, which could put you in a vulnerable position if they decide to leave.
It’s always better to do things one-to-one when dealing with finance, so speak to your tenants personally instead of going through your estate agent. Get on the phone, introduce yourself and let them know you would like to help them regarding rent during this time.
If you can put in place a rent payment scheme, as advised by the government, then do so. You will know the property is safe and that your monthly costs will be met.
Under new government laws, you cannot evict anyone from your property without giving them at least three month’s notice. If, however, your tenants decide to leave of their own accord, post your property on SpareRoom or a similar site and try advertising it at a reduced rate, or add in the description that you are willing to take offers on the cost of rent. During this time people will be looking for more affordable rent. You could also offer to house key workers, such as those working in the NHS, during this time.
What should you do if you have a spare room?
Remember that the government is advising everyone to maintain the recommended social distancing measures at all times during a house move.
If you are struggling with your finances, there’s the option of letting your friends and family know you have a spare room to rent. Your offer to help your network with a cheaper spare room may save someone the hassle of having to go back to live with their parents or having to remain in an uncomfortable lockdown scenario in a different property.
We all need to support each other right now so try and offer help where you can. Again, you could also offer your spare room to a key worker. Remember that we are all in this together.
Reducing someone’s stress around housing at the same time as reducing your stress around finance is a win-win situation. Nevertheless, you should remember that the government advises that anyone with the symptoms of coronavirus, or anyone who is self-isolating or shielding from the virus, should always follow medical advice. This is likely to mean not currently moving house, if at all possible.
This article was first published on 29 April 2020
Images: Getty, Unsplash