How COVID-19 has Impacted Landlord Confidence in the UK
A recent survey by the National Residential Landlords Association (NRLA) has revealed that almost two thirds of private landlords in England and Wales are expecting their rental businesses to be impacted in a negative way due to the COVID-19 pandemic. As a result, there is a call for the Government to help sustain tenancies by providing the finances needed to pay off COVID related arrears. Alternative suggestions are being made to help bring things back on track, and guaranteed rent for landlords could be one key idea.
A recent survey by the National Residential Landlords Association (NRLA) has revealed that almost two thirds of private landlords in England and Wales are expecting their rental businesses to be impacted in a negative way due to the COVID-19 pandemic. The survey suggests that landlord confidence has fallen, with over half feeling they will be pushed to achieve their goals for the next year. As a result, there is a call for the Government to help sustain tenancies by providing the finances needed to pay off COVID related arrears. Alternative suggestions are being made to help bring things back on track, and guaranteed rent for landlords could be one key idea.
A survey of just over 2,000 members of the NRLA found that 48 per cent felt they would face a ‘slightly’ negative impact to their business as a result of the pandemic. 18 per cent said they would face a ‘significant’ negative impact. Landlord confidence is suffering, with 56 per cent feel less confident in achieving their goals for the next twelve months than they were three months ago.
Because of these concerns, investment decisions are being affected. 16 per cent of the landlords surveyed said they were planning to buy at least one property in the year ahead, whereas 30 per cent were set to sell one or more of their properties.
Rent arrears top £437 million
An analysis by the NRLA has suggested that arrears in the private rented sector in England due to the pandemic could be in the region of £437 million. As a result, landlords are now calling on the Government to help sustain tenancies, asking for a finance plan to settle these stifling arrears.
Similar schemes have been set up in Wales, Scotland and Spain, and with this in mind the NRLA is campaigning for tenants in England to be able to access hardship loans to help pay off the arrears. Such loans would be interest-free, set up specifically to settle unpaid rents built up over the months following the original lockdown in March. Payments would be made directly by the Government to the landlords.
According to the NRLA survey, 78 per cent of respondents would support such a scheme.
Government needs to provide financial support
NRLA chief executive Ben Beadle said, “Whilst the vast majority of landlords have been working constructively with their tenants where they have struggled due to the pandemic, it is not sustainable to expect them or tenants to continue having rent arrears building indefinitely. This is highlighted in the lower levels of confidence among landlords and the impact it is having on their businesses.
“Providing the financial support needed to help tenants pay off rent arrears built since lockdown started would cost the government less than the Eat Out to Help Out scheme. As we head into more local lockdowns, it is even more important that tenants don’t have to worry about meeting their rent bill.”
Of course, since this statement was made, England has found itself in a second national lockdown. Whilst the furlough scheme has been drawn out until 31 March 2021, and the Self-Employment Income Support Scheme has been extended in the form of two further grants covering November 2020 to January 2021, and February to April 2021, this doesn’t mean that every tenant in England will automatically be able to pay their rent. Swathes of people have found themselves left out of the support schemes, whilst others have been made redundant.
What’s more, individual landlords have been unable to access small business grants or bounce back loans. Benefits rarely cover average rents, and the mortgage deferral scheme only acts to build up the debt owed by landlords. As the NRLA’s Ben Beadle said, “The Government needs to step in and ensure tenants and landlords in England have the same level of support being provided in Scotland and Wales to pay off rent arrears and sustain tenancies.”
Is guaranteed rent for landlords an alternative solution?
One way landlords can achieve peace of mind during these challenging times is to let their properties out under a guaranteed rent scheme. Such schemes see rental payments made by standing order every month, even when tenants are in arrears, and even when the property is untenanted.
At homes2let, we work closely with local authorities London wide who are actively seeking houses to let to council tenants. This arrangement allows us to guarantee rental payments, even during the most economically challenging times. Our scheme also includes a full service in property management. UK landlords looking for a solution to the national rent arrears crisis could therefore benefit in many ways.
To learn more about how the homes2let guaranteed rent scheme could remove your risk as a landlord, and solve the issue of unpaid rent brought on by the coronavirus pandemic, you are welcome to get in touch with our helpful team.
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