With the sudden escalation of the COVID-19 virus, everyone is realising that life is dramatically changing both now and in the future for everyone.
If you’re involved with properties, you’ll have a wide range of concerns around such a big asset.
Whether a tenant now not able to pay bills, landlords having rental and value losses, or property advisors stuck in the middle.
Therefore, here is an overview guide for how to deal with your property problems from this outbreak.
We’re trying keeping it as general as possible in order to try and cover everything for everyone - from landlords and tenants, to residential and commercial.
We’re also keeping it updated, with the last time we amended at the top of this post, with things evolving almost daily as people begin to slowly digest the consequences.
And we will also link to more detailed posts through out and other helpful other websites to enable you to delve in deeper when you need to.
1. Taxes & Business Support
This doesn’t directly affect the property, but by a business taking advantage of these, it takes takes the pressure off other property costs like rent.
Therefore, it is actually the first thing to look at.
A big one here is the government covering 80% of people’s income up to a £2,500 per month cap, as employees or self-employed people (Job Retention Scheme & Furlough Leave).
In short, if they can still keep people in the business but have salaries covered, even if they are at home not working, then this is a huge pressure off outgoing costs. Although back-dated from the start of March, this will take time to process.
VAT and Income Tax can be deferred, and Time-to-Pay scheme allowing delayed tax payments to HMRC, and no recovery of debt or payment penalties.
Self Assessment Tax Returns and mid-year payments have also been delayed until January 2021.
The gist is to delay paying taxes and free up cash in the business now.
On a wider scale, there is a new Coronavirus Business Interruption Loan Scheme where the government is guaranteeing debt so that lenders can still provide loans for those with more risky credit ratings via the British Business Bank.
The Bank of England also has a new lending facility to help with liquidity in much larger firms.
For people in their own homes that are struggling, there is help with Housing Benefit and Universal Credits.
Also on a personal level, loans and credit card providers are looking at payment holidays, lower monthly payments, and no late-payment penalty fees.
This is all about helping extend and accommodate debt to again help businesses and individuals with cash flow through the next few months.
The more this is done, the more help to cover direct property costs and issues.
2. Business Rates
If a business is vacating the property then they may be able to apply for 3 months void relief from rates even though a lease is still in existence.
The government is also helping businesses save money in two ways through business rates.
Firstly, certain businesses have the next year’s business rates written off from April 2020 – retail, leisure, hospitality, and nursery ones in particular.
Secondly, if they qualify for Small Business Rates Relief and therefore no or little rates being paid anyway, they can apply for up to a £10,000 grant to help with general business expenses.
At the moment there’s no proposed relief for Council Tax at residential properties.
3. Rents & Ending Leases
This is of course a huge issue, whether you’re a tenant needing to pay, or a landlord having to receive in order to then pay the mortgage.
This is the part that is still fixed in a lease and therefore due, with no government intervention – bad news for a tenant, possibly good for a landlord.
However, the government is slowly getting involved, with landlords not able to take action on evicting residential tenants for three months.
Also, for business leases, a landlord won’t be able to forfeit the lease for three months until the end of June through new legislation.
Although there can be talk of clauses and rights under leases like force majeure, rent suspension, and frustration of purpose – in reality these probably won’t practically work, but still worth checking leases in case there is something more clear.
Therefore, it’s best to look at how a business or individual can receive help elsewhere in order to take pressure off costs, before then seeing if some form of rent can still be covered.
It is bad timing towards the end of March when the full effect begins, just as March quarters or April’s monthly rent is due.
If not, and it’s just a case of getting through the next few months, then a landlord will probably help reduce the rent or allow a delayed-payment.
However, even with such savings if there is little future hope then you need to get more realistic and look at ending leases or using other security.
A break option may be coming up, but make sure they’re triggered in the correct way.
Any rent deposit could also be used by a landlord to draw upon, but carefully check deposit deeds and the basis of these being held and released.
Also, check to see if there are any direct guarantors, former tenants, or AGA agreements to call-in to pay arrears.
You also need to tread carefully where a lease is holding-over as a business lease under the Landlord & Tenant Act 1954, or a Statutory Periodic Lease for residential. Notices may be needed before simply assuming termination and keys are handed back
4. Mortgages and Finance
The interest rate has been slashed to 0.1% which will help reduce any property-owner mortgages and loans on a rate that is linked to this.
Funders also need approaching for ways to agree a payment holiday in order to ease the financial burden, particularly with no rents coming in for say buy-to-let or commercial mortgages.
Also, watch out for any valuations just being completed, as in reality values will be dropping even though on paper they may still be the same until other comparable in the market are affected.
5. Insurance Cover
This will become more important as time unfolds, but make sure it’s on top of sooner rather than later.
Building insurance is key, particularly building owners and landlords who arrange. Commercial properties are becoming vacant as businesses close, and you may need to inform the insurers to confirm what vacant-property requirements are needed.
They may not immediately know themselves whether any special COVID-19 requirements are needed, but still try.
And tenants make sure you formally tell your landlord and check lease requirements.
Bottom line – there’s now a higher risk of break ins and damages with unmanned properties everywhere.
Also check other type of insurance such as contents, particularly if you’re leaving items within a property. And let them know if you’re re-locating things to another address.
Plus any business interruption policy is worth checking, although doubtful to cover these extreme circumstances.
6. Cleaning Considerations
Of course this is the biggie, particularly at the start of the outbreak when all new, however, everyone now is becoming familiar with what cleaning is required.
Just watch out for the detail though, with cleaning contractors confirming correct COVID-19 compliance in writing. The right disinfectant sprays, masks and gloves PPE, extra-cover on prone areas like handles and banisters are all key.
Properties may not necessarily need additional cleaning, or a one-off deep cleaning; just doing what they already do in the right way.
If cleaning has to stop in say a vacant building, then not only gear-up for a full clean when re-occupied, but let all occupiers know in writing in order to take extra precautions whilst visiting in this state.
7. Services & Maintenance
Properties will still need maintaining and looking after, even when they’re vacant, and certainly when they’re being used more.
You need to quickly bottom-out who’s responsible for what, and which ones need changing.
There may be more to things like heating and water simply being turned off in empty buildings – it might be worth ticking over to cover any cold spells in the next month, and sufficient water temperatures to reduce the risk of legionnaires.
Fire systems like weekly bell testing, regular alarm maintenance, and emergency light tests may still need to continue, however, for vacant or reduced-occupation they may not – check with the experts.
Lifts might also need to be out of action and security alarms and fire alarm panels monitored-lines kept active with amended call-out procedures.
Check with contractors what they can and are willing to still do. With increased lock-down, it’s going to become more difficult and expensive to actually get them on site as they need to closedown as a business as well.
Another thing to bear in mind is the contractor’s own situation with staff. For those heavily involved in a property with sudden termination, they may need to look at completely ending and having employee wages covered through the government-backed schemes.
Plus, see if they can help with any general building checks as well whilst there.
8. Sufficient Utilities
As a general trend, commercial properties will be using less and domestic more as people go into self-isolation.
Therefore, budget accordingly with say higher gas and electricity charges at home that technically a result of your work/employment.
See if utility contracts can be changed to get better rates, including where consumption is down.
For more domestic properties with a prepayment meter, then struggling tenants may not be able to afford these and therefore special arrangements being needed to cover.
And don’t forget Internet lines, the lifeblood of modern life, with sufficient connection, speed, and reliability to where people are.
Instead of new or improved lines, there may be remote dongles on mobile phone contracts that can work and be up-and-running quickly.
As a minor point, with TV licenses the plans to charge for over 75s is now delayed.
Plus on a practical note, if certain utilities are not being used then see if they need turning off at taps and switches – or not as the case may be.
9. Updated Documentation
Ideally new or amended policies are required showing adherence to COVID-19 risks – this is all new, therefore lots of Health & Safety and Legal advisors will be working on this.
It might be a specific property Risk Assessment, or a more general policy on say business continuity.
Others may also need to note these risks, for example Health & Safety and Fire Risk Assessments.
Also, suss-out how this is communicated through say notices at buildings, circulated documentation, and general updates and emails to people.
The COVID-19 Action Plan for Properties
As we all begin to navigate through a whole new world of issues resulting from the Coronavirus, it is important to see early on how this will effect property interests, even if it does take a while to materialise.
We will keep updating this resource as things evolve, with links to other resources both on this and other sites in order to make sure everything is up to date.
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