Helpful Tips Tenancy Management

Call of the Week-I’ve offered to reduce the rent due to Covid-19, do I need to change my AST?

Written by NRLA Advice

A landlord gave our advice team a call this week with a question about offering a rent reduction to one of their tenants.

The tenant had informed the landlord they were struggling financially due to Covid-19, and were worried about paying their rent.

Sympathetic, the landlord agreed with the tenant verbally to accept a lower rent to help them out during the Covid-19 crisis.

The gave our advice team a call because they wanted to ask whether they needed to change anything on their AST to reflect the temporary change in rent. The landlord also wanted to know whether they would be required to let their mortgage lender know about this rent arrangement.

Our adviser informed this member that they didn’t need to alter the tenancy agreement. However, it would be a good idea for this landlord to document the agreement to reduce the rent at this time, rather than keep it as a verbal argreement.

To do this, the member could download the NRLA template letter on reducing the rent. This can be download by logging in to the site and clicking here.

NB: NRLA members who were formerly members of the NLA can download the same letters by logging into the NLA site and clicking on this link.

Our adviser then addressed the second part of this landlords question, about whether they had to let their mortgage provider know that their tenant would be paying reduced rent at this time.

The advisor stated that the best action to take would be for this landlord to approach their mortgage lender directly to ask the question. Landlords may contact their lender to self-certify that their tenant has been impacted by the coronavirus, that is if they wish to apply for a buy-to-let mortgage holiday if they’ve been impacting by the coronavirus.

This is done on the understanding this mortgage holiday will be passed down to the tenants, and more information about this can be read in the NRLA’s financial support guidance here.

  • Landlords with questions relating to the management of their property and coronavirus are advised to visit the NRLA’s coronavirus webpages, which are updated when needed to reflect current government guidance

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NRLA Advice

5 Comments

  • The (temporary) reduction needs to be in writing, each party having a copy signed either by both or at least by the other party.
    Should NOT do anything to change/revise/substitute the tenancy agreement itself, for several reasons:
    (a) It cannot yet be clear how long the reduction will last, i.e. we don’t yet have a date.
    (b) The deposit might need to be reduced?
    (c) There are laws/rules/regulations intended to precent “disguised deposits” (in the form of a higher rental nat the start of the tenancy).
    (d) If through an agency, on the one habd they’d want to charge a contract fee, but on the other hand they’d probably be unwilling for their commission to reflect the reduction.
    When discussing with motrgage lender, do make it clear that the reduced rent still covers the mortgage payments (if that is indeed the case).

  • Regarding the temporary discount offered. Does this mean that the tenant has to make up the rental payments shortfall once they are able to recover financially?

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