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If you are a buy-to-let landlord wondering what the future holds for your letting income, your tenants and property values, read on as we try to make sense of the current situation for landlords across the country.

It doesn’t matter whether you are a residential landlord or a commercial landlord, it’s likely that your tenants will be affected by the COVID-19 pandemic in some way, shape or form. Landlords letting holiday homes and apartments will almost certainly experience a decline in demand during the nationwide lockdown, while commercial landlords may experience businesses struggling to pay their rents due to a drastic decline in income.  

Fortunately, the UK Government is taking unprecedented steps to try and soften the economic blow and give all parties a fair and reasonable outcome.

Three-month mortgage holidays for all landlords

Landlords who were struggling to pay their mortgage due to COVID-19 were originally given the option to apply to their bank for a three-month holiday on their mortgage payments. This was later expanded into a further three-month holiday, meaning that some landlords were able to take advantage of six-months’ worth of holiday in total. The original deadline to apply for a holiday was 31st October 2020.

In response to the new coronavirus lockdown measures announced on 31st October, the Government has extended this measure. This will be available to those who have not yet taken advantage of a full six-months’ worth of the payment holiday.

Under the new proposals, the FCA state that:

  • if you have not yet taken a payment holiday, you will be eligible for two payment holidays of up to six-months in total
  • if you currently have an initial payment holiday, you will be eligible for another payment holiday of three-months
  • if you have resumed repayments after an initial payment holiday, you will be eligible for another payment holiday of up to three months 

Homeowners will have until 31st January 2021 to request an initial payment holiday. 

You won’t be eligible for a payment holiday if:

  • you’ve already had two payment holidays of up to six months in total, but you may ask for tailored support from your lender.

The FCA point out that the extension is still at the proposal stage, and homeowners should not contact their banks just yet.  

Once the proposals are confirmed, the FCA will provide further details on how to apply for this extended support.

If tenants have difficulty paying their rent

Tenants will still be liable for their rent and should pay this as usual. If they face financial hardship and struggle to pay, support is available through various Government schemes.

In the first instance they should speak to you, as their landlord, if they think they will have difficulty meeting a rental payment, and we would suggest tenants and landlords work together to come to a mutually acceptable arrangement.

It is important to open dialogue as soon as possible where it is likely a rental payment could be missed.

Landlords are not required to stop charging rent. However, the Governments of England, Scotland and Wales have announced emergency legislation to ban evictions, with Northern Ireland expected to follow.

Landlords should also ensure that they are aware of their legal obligations. The Government has produced guidance for landlords and tenants that can be viewed here.

Notice periods extended for tenant evictions

As of 29th August 2020, the Coronavirus Act 2020 stipulates that residential property landlords must give tenants a minimum of six months’ notice if they intend to seek repossession of the property. Landlords cannot apply to begin court proceedings until after this three-month window. 

With the exception of the most serious cases, landlords cannot apply to begin court proceedings until after this six-month window. These serious cases include those in relation to anti-social behaviour (including rioting), domestic abuse, false statement and where a tenant has accrued rent arrears to the value of over six months’ rent.

Deferring tax payments

The second payment on account towards income tax for the 2019/20 tax year, which would have been due for payment by the end of July 2020, has been deferred until the end of January 2021. This is an automatic process and does not need to be applied for.

On 24th September 2020 the Government announced that taxpayers with up to £30,000 of Self-Assessment liabilities due will be able to use HMRC’s self-service Time to Pay facility to secure a plan to pay over an additional 12 months. This means that Self-Assessment liabilities due in July 2020 will not need to be paid in full until January 2022.

Any Self-Assessment taxpayer not able to pay their tax bill on time, including those who cannot use the online service, can continue to use HMRC’s Time to Pay Self-Assessment helpline to agree a payment plan.  They also have a dedicated helpline –0800 024 1222  – with increased staff numbers, to help those who are concerned about being able to pay their tax due to coronavirus. 

Stamp Duty threshold raised (England and Northern Ireland only)

On 8th July, the Chancellor increased the stamp duty threshold to £500,000 until 31st March 2021, taking effect immediately. Prior to the increase, all property transactions above £125,000 incurred at least 2% stamp duty.

Green Homes Grant (England only)

Landlords can benefit from a new £2bn Green Homes Grant, which will be available from September 2020 by applying for vouchers to cover up to two-thirds of energy efficiency improvement costs up to £5,000. 

Tax tip

If you have opted to declare rental income on an accrual basis, it may be worth considering making use of the cash basis instead. If you need help please talk to us on 0800 0523 555 or use our online enquiry form.


For our latest COVID-19 news and guidance for your business, visit our dedicated Coronavirus Hub.
We will be updating it regularly as we continue to monitor and digest all the latest information

Last updated: 4th November 2020

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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