A leading Proptech expert says agents must have robust payment systems to cope with the unusual pressure of tracking mortgage and rent holidays in the lettings sector.
There is currently no official guidance from the government on whether landlords should give payment holidays to tenants affected by the Coronavirus but in the coming weeks there are likely to be many informal agreements between landlords and tenants to reduce or defer rent payments temporarily.
Neil Cobbold, chief sales officer at PayProp, is advising agencies to ensure they can accurately record changes to clients' payment schedules - ideally doing it automatically to reduce workload while at the same time producing a full and transparent paper trail.
"Agents will need to notify landlords if tenants come to them saying they can't pay their rent [and] many landlords will be open to helping their tenants during tough times. Agencies can play their part by organising payment changes seamlessly so everyone knows where they stand and can prepare for the future accordingly” says Cobbold.
The government has given more clarity to landlords by confirming that they can apply for a three-month buy-to-let mortgage payment holiday. The terms of the payment holiday will be up to the landlord's lender - their payments could be increased across the whole of their remaining term or their term may be extended by three months to cover the repayments.
"If landlords are changing their mortgage repayment structure, they will need to factor in how their portfolios will be affected and consider any changes to their expected rental income from tenants” he adds.
"Agencies need to remind their landlords that they must actively apply for a buy-to-let mortgage holiday in order to benefit, while providing them with an update on how their incomings and outgoings are being affected.”
And he adds that with a possibility of an extended lockdown, it’s crucial for agents to have appropriate remote technology in place.
"Effective communication will be more important than ever, so agencies will need to consider ways to speak to clients remotely, including video call check-ins and regular updates of important information."
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Also wording of any deferred payment schedules must be correct as deferred rent may not be 'legally due' causing issues with Ground 8 possessions if later required.
Ask the experts first, Training for Professionals already have saved me from one big mistake with a tenancy re deferred rent!
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