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Student Rents - What to do in the current crisis

Student Rents - What to do in the current crisis

There has been concern among many of our members as student tenants ask for contracts to be cancelled and rent to be waived. As many members have mortgages to pay and they rely on the residual income for their pensions, any rent reduction puts them in a very difficult position financially. The good news is that none of the agencies involved support these requests – the University, the government, local MP's and others are all saying that students need to sit tight and pay their rent if at all possible. We look at who is saying what and where you can go for advice or guidance should you be affected.

Why Are Some Students Asking To Cancel Contracts?

 Those staying in University owned halls buildings have been told they can be released from the final 2 months of their contract and will not need to pay from April 25th. On the basis that the vast majority of those in halls have already gone home (unlike most students living in the community in HMO's) the Uni have probably decided it is cheaper and more sensible to get the last few out and close the buildings completely than to continue to operate them for a small few remaining residents. One wag did suggest that the Uni's generosity on rents was perhaps intended to deflect calls for a refund of tuition fees, but we have no evidence to support this suggestion.

Unite for Students have taken a similar position with their halls – partly because they are largely 'Uni nominated' so it would be difficult to refund those allocated by the Uni but not those recruited privately and also, presumably, because with near empty buildings, it is cheaper just to empty them completely than to keep them operating with very few residents.

The bad news is that on hearing that fellow students are being 'let off' their rent, a small minority of students have wrongly assumed that the Coronavirus measures put in place by the government and others entitle them to ask for their rents to be waived.

What Is The Position of the University?

They have advised students living in the private rented sector to continue paying rent if they are able to, the full text of the email sent to students can be seen here.

What Does The Government Say / And Local MP's?

As mentioned in our April newsletter (see article here) the government position is clear "Tenants are still liable for their rent and should pay this as usual". See the full guidance here

Additionally, several members have written to their MP asking for their support. Here is what Portsmouth South MP, Stephen Morgan has said in response to concerns about the impact on small private landlords of his public statements that student halls waive rent for students: "the issues affecting tenants and landlords in the private rented sector are very different to those of students in purpose built student accommodation, which is why his work is very specific on that sector of the student housing market. This has been made very clear in the communications issued by this office and information published online on this matter.

Stephen is also taking action to help ensure the Government packages support those who are self-employed, and is supporting calls on Ministers to see what assistance can be provided to the PRS and landlords in any financial difficulties. He awaits a response from Government on this matter."

Where Can You Get More Information?

Our advice in our April newsletter (see it here) still applies. For the latest consolidation of recommendations, we recommend starting at the NRLA page on the topic (see it here).

What Is Our Advice?

 Obviously, every situation is different and you know your tenants better than anyone else, so you need to look at your specific situation and the various options detailed above and decide what is best for you.

Generally, we would say:

  • Whether you have a problem or not, talk to your tenants. Make sure they are as happy and comfortable as they can be and that all aspects of the property are as they should be and that they know they should contact you should they have difficulties as a result of the current crisis
  • If they have stayed with you and not gone home, there is no reason they should not pay their full rent but if 1 or 2 have financial difficulties (for example having lost part time jobs that they depended upon to live), then of course you need to work with them to find a solution. Our recommendation is to offer a 50% reduction now with a discussion about the arrears that accrue as a result later, but obviously, every situation is different.
  • If they have gone home and the property is empty (or at least their room), our suggestion is probably the same – start by asking for the full rent. If they can prove that the current crisis has left them in financial difficulty, then ask for at least 50% rent for the remainder of the contract and make it clear that the arrears will still be due (feel free to quote any/all of the agencies above and to share the letter from the Uni especially).
  • If you find that instead of everyone leaving at end of contract, you have people leaving at different times, given the lock down situation and the need to continue social distancing, we would recommend leaving exit inspections and deposit discussions until end of contract (i.e. treat it as if everyone left on that day). Hopefully by then we will be out of lock down and all student tenants will be able to return and play their part in cleaning and clearing the property. If some don't, you need to make it clear now that the greater burden of any issues found will be carried by them.
  • We don't know what the council tax situation will be. Knowing PCC's prior approach, they are likely to decide that as the Uni formally stopped classes in March, then CT will be liable by then as by the PCC definition, the students were no longer students from that point. We sincerely hope they do not take this position and we will be asking them not to, but do be aware that this may be the outcome and if it is, you will need to pay the increased bill.
  • If you reach the point, where students are adamant that they cannot pay even a reduced rent, then feel free to follow the practice of one of our letting agent members, who sends them the following:

"You have signed a legally binding agreement, please check the terms of your agreement with me.

In some circumstances you can DEFER rent but remain liable for the full amount.

Please confirm that you are still in receipt of a student loan and if yes, the date and amount you are due.

If you have suffered a loss of income, please provide your last 3 months payslips and notice of Furlough from your employer.

Please state what steps you have taken, by seeking Furlough payments of benefits to mitigate your loss.

I will require all of these details, together with an agreed repayment plan, if I am to seek any arrangement with my mortgage provider allowing me to defer my repayments."

He also points out that if they refuse to pay or make an arrangement ultimately, he will have recourse to the county court, and will seek an order that they pay his costs. He also reminds them that they should think very carefully about the impact on their credit score, future ability to rent property or obtain credit, or enter a profession with a CCJ registered against their name

We hope all of the above is irrelevant to you – but if it is not and you do have concerns, do let us know – we have no meetings scheduled at present but could easily set up an online meeting for affected student landlords if you want to discuss some of these issues with others facing the same problems.

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Written & oral information and advice from the Portsmouth & District Private Landlord's Association is given in good faith, but no responsibility whatsoever is accepted by the Association or it's officers for the accuracy of it's information & advice nor shall the Association be held responsible for the consequences of reliance upon such information.

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