When asked about how the agreement had come about, more than a third of landlords who gave a form of rent reduction said that they proactively offered it to their tenant, while a further 45 per cent said it was a mutual decision.
Concerns around furlough, job security and redundancy were all common reasons why a rent reduction or payment holiday were suggested.
Impact of payment holidays and rent reduction on the industry
Payment holidays are offered by some loans and mortgages. As long as this is agreed within advance they allow people to miss the occasional monthly payment. Throughout the Covid-19 crisis, payment holidays have been relied on heavily as an economic support measure.
John Eastgate, managing director of property finance at Shawbrook Bank, comments: “No amount of foresight could have prepared landlords, or tenants, for the impact of the pandemic.”
“During this incredibly difficult period, landlords acted pragmatically, recognising the additional strain their tenants were under. In fact, in many cases, landlords were initiating the conversation around cutting rents to ease their financial burden.”
Landlords estimate they suffered losses by offering payment holidays. Although these only last for three months on average, an estimated £7,500 on average was lost by landlords by offering payment holidays.