Foreword

The coronavirus pandemic has been a challenging time for renters and landlords and the reality is,

the effects of this dreadful event will be with us for many more months to come. It will leave many

facing financial insecurity for the first time.

Despite this challenge, it is important to stress that the landlord and renter relationship remains a

strong and productive one.

Independent research carried out for the NRLA found that 90% of tenants are still paying their rent

in full. For the 10% that cannot, the vast majority of landlords have been able to provide some

financial support to help navigate the immediate crisis.

Open and honest communication from both parties is key. This research has found that responsible

tenants and landlords remain committed to sustaining tenancies long-term wherever possible. The

only way this can be achieved is through dialogue.

These provide strong foundations to work from and this guidance is aimed at ensuring everyone

involved in renting has a clear framework within which to reach agreement over rent arrears where

they might have developed or built.

The NRLA has produced this guidance with support from the wider sector. We are grateful to those

organisations who have contributed to this document and endorsed it.

At a time of great challenge, it is so important we work together. This document seeks to achieve

this as we come out of lockdown.

Ben Beadle Chief Executive NRLA

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Arrears Management and Coronavirus:Working together to sustain tenanciesIntroduction

For many landlords and tenants in the private rented sector (PRS), the coronavirus pandemic has

been their first experience of rent arrears. The majority of tenants have always paid their rent on

time; less than 1 in 10 private sector tenants go into arrears over a 12 month period.

As the economic impact of the coronavirus pandemic bites, this is changing rapidly.

This guide is designed to help both landlords and tenants find a way to work through this, giving

them both peace of mind and the confidence to continue the tenancy for long after the pandemic is

over.

Starting the conversation

The most important thing to do is to get in touch with each other. For many tenants, this will be

their first experience of not being able to pay essential bills and they may be apprehensive about

contacting their landlord in the circumstances.

What would be worse would be to ignore the situation and do nothing.

By starting a conversation with the landlord, the tenant can potentially relieve the stress of financial

worries and access financial assistance. According to a recent survey by the NRLA, 90% of PRS

landlords offered financial assistance in some way when asked by tenants affected by coronavirus.

Obviously, the ability to do this depends on the landlord’s own circumstances.

Tenants should contact their landlord via email or phone, clearly explaining how coronavirus has

affected them and asking what measures the landlord may be willing to provide in the circumstances

to help alleviate the immediate debt problems. By confirming they are affected by coronavirus this

allows the landlord to apply to defer mortgage payments (in the event they have one) and pass on

the benefit of this to the tenant.

For landlords who have not been contacted by their tenants, proactively starting the conversation

with all of their tenants themselves, prior to rent arrears developing, is also a good idea. This should

be done by the tenant’s preferred method of communication as it is likely to lead to the most

positive outcome. If the landlord has more than one tenant in a property, they should ensure they

are contacting all of them individually rather than just contacting a lead tenant to discuss finances.

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For most tenants, the impact on their finances will be temporary and they may be worried about

talking to their landlord. By proactively engaging compassionately with them, the landlord can not

only help to reduce their money worries, but also ensure both parties are committed to working

together to ensure any arrears are managed afterwards, allowing the tenancy to continue for a long

time after the pandemic ends.

Keeping and sharing records

At every stage of managing arrears, both landlords and tenants should keep records to ensure that

everyone understands what has been agreed to or offered. This provides certainty to both parties

and clear instructions on what everyone needs to do to stick to the arrangement.

It also ensures that the landlord can evidence the steps they have taken to help the tenant manage

their arrears should there be a need for mediation or court action in the future.

Where the tenant’s preferred communication method is via phone or text, the landlord should

ensure they are sending a follow up letter or email outlining exactly what was discussed. This letter

or email should make it clear that, if the tenant disagrees with what was discussed, they should

provide their own corrected version to the landlord within a reasonable timeframe (7 14 days).

Finally, once a rent repayment plan has been arranged it is essential that the landlord is sending out

regular, easily understood rent statements to show the tenant how much they have left to pay off.

Managing arrears during the coronavirus pandemic

Once both landlord and tenant are communicating about the financial difficulties there are a

number of ways for the landlord to sustain the tenancy by providing support to their tenant; either

via direct financial support or providing information and assistance on how to access financial

support from the Government or local authority.

Offering financial support to tenants during the crisis

Where the tenant has contacted the landlord to request financial support, there are a couple of

different ways to reduce the rent temporarily.

Rent Reductions

The most common offer from landlords is to reduce the rent for the duration of the crisis. This can

be agreed on the basis that the reduction in rent will be deferred and paid back later or that the

reduced amount will be waived completely. There is no need to agree this with a new contract or

face to face meeting so it can be arranged by email. However, the email agreement should be clear

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on the terms of the rent reduction; if the reduced rent is expected to be paid back later then both

parties should clearly agree on this.

Another option would be to consider reducing the rent permanently. If the tenant’s income is

reduced long term as a result of coronavirus they will ultimately look to leave the property if they

cannot afford to live in it. By offering a rent reduction that is less than the cost of reletting, a

landlord can save money and sustain a tenancy long term. Similarly, if market rents decline in the

area then a rent reduction to the new rate may be an attractive option. If a landlord does decide to

offer a permanent rent reduction, they are best advised to speak to their mortgage or insurance

providers first to ensure the best way to proceed.

Where the rent has been reduced, landlords should consider whether the deposit may need to be

partially refunded. The tenant fee ban in England introduced a deposit cap usually equivalent to five

weeks rent from the start or renewal of a tenancy. In most cases a rent reduction will not affect this

amount but if the current tenancy is replaced while the reduced rent is in place a portion will need

to be returned to bring the deposit in line with the deposit cap.

Alternatively, the landlord may agree that at the end of the tenancy any rent arrears will be taken

from the deposit with the tenant’s agreement. However, if this is the case then landlords should be

aware that the deposit will not be available to cover any damage caused to the property.

It’s important to ensure that whatever landlords agree with their tenants that it is recorded in

writing.

Deferring payment entirely

Alternatively, in some circumstances the preferred option might be to agree to not chase the tenant

for the rent, waiting for them pay the rent in full at a later date. For example, tenants who qualify for

the self employment grant or those waiting for Universal Credit payments may have to wait some

time for their payments to come through.

As the rent is still due, landlords can simply inform the tenants that they understand there will be a

wait for payment and that they will expect it when their claim or grant has been processed.

In these cases, both the tenant and landlord should continue to stay in touch in case of any delays on

the initial payment or if the tenant needs any support with welfare applications.

Similarly, the landlord may agree that at the end of the tenancy any rent arrears will be taken from

the deposit with the tenant’s agreement.

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It’s important to ensure that whatever landlords agree with their tenants that it is recorded in

writing.

Offering support with welfare applications to tenants

The best way to avoid worries about rent repayments is to ensure that the rent can still be paid. The

Government’s own guidance on the issue of rent is that where it can be paid it should be, so it is in

everyone’s interest to ensure that everything is being done to keep up with the rent repayments.

Like the majority of the population, many private rented sector tenants will have no prior experience

of making Universal Credit or other benefit claims. These households are likely to not feel confident

about making the application themselves and they may not know everything they are entitled to at

this time.

If a tenant has gone into arrears then the landlord can help by contacting them to discuss why the

arrears have happened, and what their circumstances are. If the landlord has experience with

making Universal Credit claims, or helping others to do so, they may be able to offer to assist their

tenants with making an application. Likewise, if arrears start to build, landlords may be able to assist

by discussing their tenants change of circumstances and helping to identify benefits that may be

available based on their experience of letting.

However, as tenants in the PRS rarely go into arrears, most landlords will not have experience with

making applications. In these circumstances, the important thing is that the affected household gets

the right information so they can progress any applications as fast as they possible.

Landlords can help by signposting useful advice services, resources, and websites such as

https://www.stepchange.org/ or https://www.citizensadvice.org.uk/ for debt advice

https://www.gov.uk/apply universal credit to apply for Universal Credit

https://www.gov.uk/guidance/universal credit advances if they need to apply for a budget

advance during the 5 week wait for the first payment

https://www.gov.uk/guidance/claim a grant through the coronavirus covid 19 self

employment income support scheme if the tenant is self employed and their business has

been affected by coronavirus

https://www.gov.uk/employment support allowance to apply for Employment Support

Allowance

The tenant’s Local Authority for applications for discretionary housing payments.

https://www.citizensadvice.org.uk/about us/contact us/contact us/help to claim/ for

providing assistance with making a claim

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When an application for benefits has been made, it is vital that the tenant keeps the landlord up to

date with the application, including whether any evidence has been provided. This is important, not

only for keeping up clear constructive communication, but also because knowledge that a claim has

been made may give the landlord confidence to continue with the tenancy.

Direct payments to the landlord

Where a tenant is in arrears, the landlord may apply for direct payments of the housing component

of Universal Credit by applying online at –

https://www.gov.uk/government/publications/universal credit landlord request for a managed

payment or rent arrears deduction

If the tenant has missed two months of rent payments the landlord should be able to receive the

Universal Credit payments directly from the DWP. However, as the housing component of Universal

Credit is lower than average rents the landlord should tell the tenant of any shortfall, allowing them

to budget accordingly.

Managing arrears repayments sensibly

Budgeting during the crisis

Not all households will need assistance budgeting, but in any situation where somebody has their

income reduced, the best advice is to consider as early as possible what spending is essential and

what is non essential. Households can then focus on non essential spending that may be reduced to

help pay for essentials such as utilities, food, council tax and rent.

The best way to do this is for a household to prepare a budget planner that they can stick to. Many

landlords and tenants alike already do this and will be familiar with the process for creating one. For

those who are not though, independent debt advice providers have templates available for free on

their website such as

https://www.citizensadvice.org.uk/debt and money/budgeting/budgeting/work out your budget/

https://www.moneysavingexpert.com/banking/Budget planning/

Planning a budget can be time consuming and will require accurate records of spending but it is

worth it. Not only will it help reduce the stress of debt, but it can form the basis for a reasonable

repayment plan once the tenant’s finances are back to normal, allowing them to free themselves

from debt earlier.

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Accurate information is key to budgeting. Ideally individuals should refer to at least their last three

months of credit card and bank statements, as well as their shopping receipts for regular spending.

These can be used to add up how much they normally spend each month and compare it to the

income they expect to receive in future months.

Once this budget plan has been completed, the households may wish to refer to it in discussions

with their landlord if they are unable to pay all of the rent. They may even choose to share it with

their landlord to demonstrate why they are unable to meet their rent payment. When doing so there

is no need to provide financial statements or receipts but it is wise to keep these in case there is a

need to refer back to them later. By preparing an accurate, sensible budget, it helps both parties to

understand the situation and it shows that the tenant has been doing all they reasonably can to

ensure they are keeping to the terms of their contract.

Agreeing a repayment plan

Once a budget has been prepared, both parties will be well placed to discuss a sensible repayment

plan for the future. This repayment plan should detail the amount to be paid each week or month

and ideally be signed by both parties to show they have agreed to abide by the terms of the plan.

When considering the amount of time required to pay the arrears it is crucial that both parties are

realistic. A balance must be struck between relieving the household of debt swiftly and not

increasing financial hardship. The key thing to consider is how much is available in the tenant’s

budget after essential living costs have been met.

For example, a tenant who is furloughed may suffer a temporary loss of income but recover quickly

when their job resumes. Depending on their other essential spending, with sensible budgeting they

may be able to pay off any accumulated arrears quickly.

By contrast, if a tenant loses their job or has to continue on reduced hours, their medium to long

term income is likely to be lower than before. As a result, any repayment plan would need to be

structured over a longer period.

In these circumstances, landlords should engage constructively with their tenants to arrange a

sensible repayment plan that allows the tenant to pay back what they can afford in a reasonable

timeframe for both parties. Offering a payment plan that is much lower or higher than the available

budget is likely to antagonise the other party, making constructive solutions difficult.

Sustaining the tenancy long term should be the goal of these repayment arrangements for both

parties. Rent arrears are normally a rare occurrence in the PRS, but when it does happen repayment

is unlikely if the tenancy does not survive. If both tenant and landlord stick to a sustainable long

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term plan to pay back the arrears, the landlord can recoup some of the lost income and there is no

need for otherwise healthy tenancies to come to an end.

Mediation

While this guidance is based on the principle that tenants and landlords working together

constructively can come to a sensible arrangement for paying any arrears, there will be times where

an agreement cannot be reached.

In these cases, it may be worth considering a mediation service.

Mediation services can help to set up an agreement that is legally binding on both parties. However,

this service costs money and it is in the interests of both parties to work together to avoid having to

reach this point.