Should Hardship Loans be Given to Tenants to Help Landlords?
Here at Property Loop we are aware that some landlord organisations are urging the UK government to give interest-free hardship loans to tenants who have fallen behind with their rent as a result of Covid-19.
The trade body, the National Landlords Association (NLA), say their members can’t afford to subsidise tenants and, frankly don’t see why they have to. Housing is a government responsibility, they insist, and most landlords have their own mortgage to pay (as well as their tenant’s rent in the case of many).
Certainly, as far as we can make out here at Property Loop, the situation has worsened with lockdown and many workers – especially those aged under 24 – losing their jobs in the hospitality, tourism and leisure sectors.
A survey, carried out by rental platform MakeUrMove showed that one in 12 tenants were behind with their rent as a result of coronavirus and lockdown. That is around eight per cent of UK tenancies. Prior to lockdown in March and the onset of the virus, only one per cent of tenancies were recorded as being more than 21 days in unauthorised arrears with rental payments. That figure has now doubled.
Meanwhile, other results from the MakeUrMove data suggests that one in 10 landlords is a tenant themselves, meaning they also have rents to pay. They may also be facing a situation where they have been furloughed and worrying about meeting their own mortgage payments. In a worst-case scenario, they could end up losing their property.
Bob Young, chief executive of mortgage lender Fleet Mortgages, says the “government’s shifting housing non-payment of rent to landlords with no recourse” could mean less private rental property and a worsening housing crisis.
In March we learned at Property Loop the government had made it illegal for tenants who couldn’t pay their rent due to coronavirus, to be evicted for three months. This was extended until the end of August and in September another six months eviction-free period was introduced.
Tenants Can’t Pay and Landlords Fall in to Debt
The NLA wrote to Boris Johnson warning landlords were accumulating huge debts because their tenants couldn’t pay their rent and couldn’t be evicted. In ‘normal times’ landlords can apply to the courts to evict a tenant if he or she is more than two months in arrears with their rent. Most of their members, the NLA explained, weren’t property tycoons but landlords with one or two properties and were struggling financially themselves.
NLA chief executive Ben Beadle described the government’s failure to provide for landlords as a ‘kick in the teeth.’ He added that landlords had “done the right thing” [by the government] in discussing financial difficulties with tenants and in a great number of cases, giving their tenants the opportunity to defer rent. And yet, he said, his members were being punished for it.
Beadle’s remarks were countered by Shelter chief executive Polly Neate. She praised the government for saving thousands of private renters from homelessness by banning evictions for six months. Figures by Shelter, showed 230,000 private tenants had fallen behind with rental payments since the onset of lockdown at the end of March.
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