Landlords have been sharply criticised by a broker for allegedly trying to cash in on the Coronavirus crisis by demanding mortgage holidays they do not absolutely need.
Mortgage for Business has issued an outspoken statement claiming only “a handful” of landlords contacting its switchboard about repayment holidays are raising legitimate concerns.
It says that while some landlords may be in genuine financial hardship as a result of COVID-19, most have sufficient means to get them through a difficult period.
Steve Olejnik, managing director of Mortgages for Business says: “Only a handful of are raising legitimate concerns about how to pay their mortgage in the face of the COVID-19 pandemic. Quite apart from the moral implications of abusing an emergency mortgage repayment scheme brought in at a time of national crisis, it could play out badly for the landlord.”
His firm’s statement then suggests that “landlords need to think long and hard before submitting a request for a payment holiday to their mortgage lender.”
Olejnik continues: “Landlords must be aware that any requests could potentially damage any approaches to that lender. Lenders expect landlords to be able to cover void periods under normal circumstances – where a property is empty, and a landlord isn’t getting any rent – so they won’t take kindly to landlords trying to take advantage of them just to build up some cash reserves.”
He goes on: “One borrower with three live cases with their lender approached them for repayment holidays on another, existing loan. The lender immediately cancelled all three. Smart landlords, who want to capitalise on short-term house price falls and expand their portfolios when the lockdown is lifted, should think long and hard before approaching their lender.”
The broker says that a landlord’s tenant may be in distress and unable to make rental payments, but to benefit from the scheme, landlords also need to unable to meet their mortgage repayments.
Olejnik says: “Don’t jump on the repayment holiday bandwagon! Any deferred payments will have to be made at some stage and it could create problems down the line – especially when you come to refinance or grow the portfolio.”