PRS Landlord (non-business) Covid19 Loan Support
The Scottish Government has today published this update to the landlord loan scheme, saying:
“No landlord should evict a tenant because they have suffered financial hardship due Covid-19 and landlords should be flexible with tenants facing financial hardship and signpost them to the sources of financial support available.
“Tenants will still need to pay their rent and measures have been put in place to help people who are facing financial difficulties as a result of the Covid-19 outbreak but we know it will take time for these measures to kick in and landlords could be facing delayed or loss of rental income.
“To support landlords, the PRS Landlord (non-business) Covid-19 Loan is available to assist landlords experiencing interruption to normal monthly rental payments.”
General guidance on Coronavirus (COVID-19) for private landlords and letting agents can be found here – https://www.gov.scot/publications/coronavirus-covid-19-landlord-and-letting-agent-faqs/
The PRS Landlord (non-business) Covid-19 Loan will provide short-term support for landlords where tenants are having difficulty paying rent as a result of the impacts of Covid-19. Landlords should be engaging with their tenants to manage these difficulties and this loan is intended to support them to do this.
The interest free loan is available for PRS landlords who:
- were, or had applied to become, registered before 01 February 2020;
- are not classified as businesses;
- have 5 or less properties available for rent
- properties available for rent are classed as being within the private rented sector (as per the terms of the 2006 Housing Scotland Act)
- have lost rental income as a result of tenants facing difficulty in paying rent as a result of the Covid-19 situation or where a rental property became vacant on or after 01 August 2020 and the landlord is unable to get a new tenant because of the restrictions currently in place.
The loan scheme funding may be used to pay the mortgage on a rental property where your mortgage lender is unwilling to provide a mortgage holiday or to pay living expenses that would usually be covered by the lost rental income. This includes where the rental property has no mortgage or you are covering mortgage payments by other means.
The loan scheme will cover lost rental income for up to 3 properties although landlords will be able to indicate if they are losing rental income from more than one property.
Landlords will be able to apply for a loan to cover lost rental income for a period of up to 6 months, backdated to the 01 August 2020. An initial payment of half of the agreed amount will be available and landlords will be asked to verify the continued loss of income before the second instalment is paid.
Loan repayments will be deferred for 6 months, with the loan being repaid in 24 monthly instalments. The loan can be fully repaid at any point and requests for extension of the payback period will be considered on a case by case basis.
The loan is intended to provide an option where other forms of financial support are unavailable to the landlord. Where a landlord is eligible for other forms of support – for example the Coronavirus Self-Employment Income Support Scheme – then they would be expected to take these up rather than apply for this loan.
Mortgage lenders are making repayment holidays available in line with UK Government commitments. In the first instance, landlords facing difficulties with mortgage repayments for a rental property are expected to seek a mortgage repayment holiday from their lender rather than apply for this loan.
In all circumstances, landlords should engage with their tenants, as detailed in the Coronavirus Guidance (COVID-19) for private landlords and letting agents. Although landlords cannot compel tenants to access the available support, it is beneficial to engage with tenants experiencing difficulty to raise awareness of the help that is available to them.
Where the landlord is applying for this loan in respect of loss arising from their tenant being unable to pay their rent, it is expected that they will have discussed rent issues with the tenant and reached agreement on managing rent arrears before they apply for the loan.