I was recently contacted by one of our wonderful tenants who happens to be self-employed and in an industry that had to shut down quickly due to COVID19 a couple of weeks ago. She was being proactive in explaining her financial situation and anticipating that cash-flow would be a challenge for April. I did some research and proposed a plan to defer her April rent, with the idea that the programs coming down the pipeline from the BC and Federal governments shortly will kick in over April and allow her to pay rent as usual starting in May. Once things are back to normal later this year, we’ll work out a plan to catch up on the outstanding April rent.
Everyone’s financial situation is different, and the coming months are going to pose challenges for tenants and landlords alike. Open communication, flexibility and compassion are going to be really important so we can get though this together.
So if you are a renter and you’ve lost your job due to COVID19, or if you are a landlord and you know one of your tenants is in that position, here are some of the key programs and policies announced (as of March 26, 2020) that will help smooth out the upcoming financial challenges.
- The Canada Emergency Response Benefit (CERB) (Federal Government)
Just announced this morning, the federal government announced a new program called The Canada Emergency Response Benefit (CERB). This program will be available to people who have had to stop work due to COVID19, and will pay $2,000/month for up to 4 months. The CERB will be a separate program from regular EI, and they will have an application portal available within a couple weeks with the goal of getting the first payment out within 10 days of application. You can find more info on that here:
- The BC Emergency Benefit for Workers (Provincial)
A 1 time payment of $1000 from the provincial government, called the BC Emergency Benefit for Workers, will be available to everyone that qualifies for the CERB program above. It will likely have a different application that needs to be completed, likely through a new website portal that will be available in a couple weeks. The government says this payment will go out by May. https://www2.gov.bc.ca/gov/content/employment-business/covid-19-financial-supports#BCEBW
- Rental Supplement Program (Provincial)
The BC Government just announced that they will be offering $500/month for the next 3 months, on behalf of renters and paid directly to landlords, in order to help cover rent through this crisis. It is expected that this program will be run through BC Housing, but at this point it is unclear exactly how the application and payment process will work or how quickly it will be available. You can find the announcement here: https://news.gov.bc.ca/releases/2020MAH0048-000561
- Student Loans: Effective March 30th, the Federal and BC Governments have announced that they will be freezing all government student loan payments and suspending interest until the end of September. This should happen automatically with both institutions, no need to apply. https://www.canada.ca/en/employment-social-development/corporate/notices/coronavirus.html
- BC Hydro: you can defer your hydro payments for several months by calling customer service: https://www.bchydro.com/news/press_centre/news_releases/2020/bill-relief-covid-19.html
- ICBC: If you are paying ICBC car insurance on a monthly plan, you can defer those payments as well: https://www.icbc.com/about-icbc/contact-us/Pages/covid-19.aspx
- Vehicle Leases or Financing: Several automakers (Ford, Hyundai and Toyota) have announced they will offer short term deferrals for customers with lease or financing payments: https://driving.ca/hyundai/auto-news/news/ford-and-hyundai-offer-financial-relief-to-canadian-customers
Addendum for Landlords
In general, we advise against deferring mortgage payments, since you end up being charged interest on unpaid interest (you can read more about Mortgage Payment Deferral here). But at this time, given that it’s going to be a few weeks before the government programs start paying out, it would be prudent to take stock of your own financial picture and determine how a delay in receiving rents will affect your ability to make your next mortgage payment.
If you are a landlord and you depend on receiving rental income in order to pay your mortgage, you should do a quick assessment of your tenants to determine who might be impacted with a job loss or significant drop in income and may need special accommodation or an extension on paying rent for April. Based on that assessment, if you will be challenged to cover your own bills and mortgage payment, you should investigate whether your bank/lender offers a “Skip a Payment” feature for your mortgage product(s). Many do (some can even be requested online through their client self-service portal), but usually you have to submit the request at least 10 days before your next scheduled payment so the payment debit system can be updated. Some lenders also have different rules for mortgages on your principal residence compared to mortgages on rental properties, so you may need to do a bit of digging in the fine print of your mortgage agreement to find out the options available for your particular mortgage product.