If you are in the situation where your income is threatening your ability to pay rent, you must take action now, rather than later.
Many renters are going to feel trapped, and possibly even terrified, by the sequence of cause and effect events of the coronavirus, particularly if the forced lockdown is going to impact on their ability to pay their monthly rent. Anxiety is not an unusual emotion because included among the basic characteristics of all living organisms is the need for shelter, which keeps us protected and makes us feel secure.
In being trapped in your current accommodation for three weeks, whether you can or cannot pay rent, means that during this time your options about where, and under what roof you live have gone. For 21 days you are forced to remain where you are by law. More importantly, for some, it’s the ‘how’ you are going to pay for this necessary roof-over-your-head that is going to escalate your emotions.
Money is a word that has the ability and power to provoke the most extreme of human emotions. If your income has been impacted by not being able to work during lockdown, or even worse, you have no income or circumstances have reduced it, you may feel overwhelmed by the potential consequences of your commitment to a lease agreement.
You need to press pause. Amid the millions of thoughts and dire consequences you are imagining, there may be a solution, and if you can’t find it, there are organisations that have stepped up to help you navigate through an existing lease agreement.
Banks for example. As guided by the Banking Association of South Africa (BASA), and the country’s laws and regulations around the financial services market, banks have opened their collective hearts to the dire straits that their customers may find themselves in, and will review on a case-by-case basis.
Telephone channels and digital banking services are in support to provide access to qualified consultants who can professionally guide those in distress to a financial solution.
Solutions for landlords and tenants
Further reassurance comes from Dave McGlashan, the Chief Operating Officer at SA Property Investor’s Network (SAPIN) who is similarly empathetic towards tenants that have to meet their obligation to pay rent as per the terms of their lease.
“In the same vein, landlords also have financial obligations to meet, so a middle ground must be sought. With the uncertainty of having no clear end date to the effects of the coronavirus, we are advising landlords to accommodate the situation by putting in place a deposit utilisation or a rental deferment agreement.”
This requires finding middle ground, McGlashan advises, but one that must be reached with kindness and consideration of one another’s predicament. “We suggest that a compromise can be made by both parties where the tenants should pay an achievable rent, and landlords should be flexible by offering rental deferment and/or a deposit utilisation.”
McGlashan also highly recommends a visit to TPN Credit Bureau’s site, a specialist credit bureau specialising in the collection of tenant behaviour and rental payment profile information. Michelle Dickens is TPN’s Managing Director and founder, that along with SSLR Inc. and Fullard Mayor Morrison Inc, have in response to the COVID-19 disaster, developed a complimentary Rental Recovery Pack, aimed to foster negotiation and agreement between landlords and tenants.
Dickens describes the mechanisms contained in the Rental Recovery Pack; an Income Declaration application for tenants, and a Deposit Utilisation Agreement and/or Rental Deferment Agreement.
“The Income Declaration Agreement enables tenants to officially declare to the landlord that their income has been affected due to the State of Disaster/lockdown, be this through part or full loss of income, retrenchment, temporary forced unpaid leave, or even shortened working hours. The property manager or landlord can then verify this with the tenant’s employer as well as request supporting documentation.”
Dickens emphasises that in using this Agreement, it is very important that the landlord is satisfied that the tenant has displayed good rental payment behaviour in the past.
The Deposit Utilisation Agreement and/or Rent Deferment Agreement, are documents that can be used by landlords in recognising or acknowledging the Income Declaration Agreement and thereby enact repayment terms that work in both parties favour. “In the first agreement, the tenant may agree for the deposit to be used in lieu of rent with the understanding that the he/she will reinstate the deposit in instalments once the State of Disaster has been lifted,” says Dickens.
“The Rent Deferment Agreement confirms the arrangement for repayments of any rents missed or deferred to a later date and are obviously legally binding.”
These are solutions that provide the landlord with an immediate solution to cash flow, and for the tenant, there is reassurance that financial damages can be mitigated, albeit at a later date. TPN has also provided an online YouTube video that provides clarity on the steps that can be taken in each scenario, and a help desk can be called for legal advice and guidance (0861 876 000).
Alleviation of any anxiety you may be feeling is the most important contributor to your remaining healthy. If you know that your ability to pay rent is threatened, but you can engage with solution providers, such as your landlord or your bank, you should do this in the early days of lockdown rather than at the end, when your stress levels may be heightened.
The coronavirus, and the lockdown, may have isolated us from one another, but ironically it has also brought us together, albeit in mind and spirit. No matter what your circumstances, there are people and organisations that are working to help. Explore the internet, stay alert to news announcements, speak to those with knowledge. Most importantly, speak to your landlord, who in turn may be feeling the same anxieties as you, and therefore your common ground is established.