After the COVID-19 pandemic, the need for occasional rent relief policies has become apparent. This has also meant more confusion about the binding nature of previous contracts, as the government has implemented policies for evictions and foreclosures. Rent relief is important to both tenant and landlord, as the tenant could struggle to be able to pay, while the landlord needs the rent as his livelihood. But, as a landlord, you don’t want to cause undo strain on your tenant if you can help it.
During a recession, there are a few issues landlords face. It could be difficult to collect rent. Renters could also move out, and it could be hard to find new ones. Clear policies and procedures help mitigate these challenges. As a landlord, you must make sure you give all your tenants the necessary information up front. That way they know exactly what they are getting into.
Rent Relief Plans
Here are a few of the ways you can help a tenant in need. You must know any loopholes that could be exploited and what it means for you in regards to taxes.
- Defer rent. The lump sum is then due at a later date, or the tenant can pay the rent in smaller sums over time.
- Reduce rent. You can do this in a number of ways and could be for only some of the lease or the rest of it.
- Make the unpaid rent into a loan that the tenant pays over time. This is called a loan conversion and should have a promissory note.
- Forgiving rent. You can always forgive the rent not paid by the tenant.
Importance of Rent Relief
All these strategies are good, but why is it important to help tenants with rent relief? It can take a toll on you if your tenants are unable to pay their rent. Therefore, you should try to work with your tenants when you can to assist them with their rent. Make sure to document everything when you do this, and try to take the circumstances of the tenants into account, especially if they are already defaulting. Being gracious to your tenants will make you a more desirable landlord, and a better one overall.