The COVID-19 pandemic has had a number of profound effects on people’s lives, including their financial stability and uncertainty for individuals living in mortgaged or rental properties. The Government has implemented guidance and policies to support with these financial obligations during such uncertain and unprecedented times.
On the 17 March 2020, the government announced that individuals struggling to continue meeting mortgage payments could be offered a mortgage holiday of up to three months by their lender. Individuals can apply and may be granted the mortgage holiday if they are up to date with current mortgage payments. If you have fallen into arrears on your mortgage, your lender may still be able to offer you a mortgage holiday, but it will be at their discretion and based upon an assessment of your overall circumstances.
Furthermore, buy-to-let property owners may be able to apply for a mortgage holiday if their tenants have fallen upon financial difficulty affecting their ability to meet their payment obligations. Landlords who apply for a mortgage holiday are expected to offer financial relief to their tenants.
If you think you will struggle to maintain mortgage payments, contact your lender at the earliest opportunity, as this will allow your lender to offer appropriate support in a timely manner. Information on how to apply for a mortgage holiday should be available on your lender’s websites, alternatively you can contact them via telephone, to talk you through the process. Most lenders will not require you to go through full assessment of your situation and may allow you to self-certify that your finances have been affected as a result of the coronavirus outbreak.
During this time, interest will continue to accrue and will be added to the overall mortgage amount. After the three months payment holiday, your lender will contact you to discuss the different options available. These can include spreading the accrued interest over the remaining payments or considering an extension the mortgage term. The lender will assess your individual circumstances and offer the most suitable option to you.
This is referred to as an emergency payment freeze, which means it will not be visible on your credit report. Credit reference agencies have confirmed that customer credit ratings will not be affected by taking the payment holiday.
All renters are required to pay their rent as per the terms of their tenancy agreement, however if experiencing financial difficulties, it is important to contact your landlord at the earliest opportunity to make them aware of your circumstances. You can try to reach an agreement with your landlord regarding a rental payment reduction and/or a repayment plan for rent arrears that may accrue during these uncertain times.
Furthermore, you may be able to seek financial support through welfare benefits or charitable grants if you are struggling financially. If you are eligible and have been accepted for Universal Credit, you will usually have to wait 5 weeks for your first payment. However, you can contact Universal Credit directly and discuss a potential advanced payment.
Your landlord can normally serve notice to leave the property if you fall into 2 months’ rent arrears or if you are not currently in a fixed term contract. However, the Government ordered that any notices served on or after the 26th March 2020 must give at least 3 months’ notice to the tenant. This applies to private rental agreements, council owned properties and housing association properties. This extended notice period will apply until 30th September 2020, however this date may be subject to change given the uncertain times.
If the notice period ends and you do not leave the property due to not having an alternative place to live, your landlord would need to apply for a possession order through the courts. Due to the current situation all court action in relation to eviction proceedings have been suspended until the 25th June 2020. Therefore, your landlord will not be able to obtain an eviction order from the courts and bailiffs will not be appointed until after this date. It is however important that tenants are considerate of the stress, time and potential financial implications that may arise as a result.
Contact the Health Assured helpline for further support if you have any questions about the above.