Chancellor Scapegoating PRS Landlords With Covid Debt Problems
An industry body has just published a report stating that the Chancellor has not supported landlords in their greatest hour of need caused by the pandemic.
The report says that by not offering any forthcoming financial aid to landlords suffering from Covid related rental arrears, the Chancellor is forcing them into having to make a ‘Hobson’s Choice’ ….either way they will lose out. They will either have to continue to ‘ride the storm’ of no income or repossess their property with all of the associated issues that will affect their tenants.
The body warns Sunak that with taking on ever increasing rental arrears landlords will stop ‘turning the other cheek’ unless the Treasury steps up.
The report’s figures shows how big a problem it is for landlords in England and Wales as more than 800,000 tenants have built up rental arrears since the start of the pandemic’s lockdown restrictions, which are still owed and continuing to rise.
Around 60 per cent of landlords are resigned to the fact that their business will not fully recover from the pandemic.
Although 90 per cent of landlords are individuals with nearly 50 per cent letting out only one or two properties, of those that had given a tenant a rent free term or had referred rent 58 per cent had to fund their losses from savings.
The trade body wants the government to resolve this crisis by introducing new rates of local housing allowances to reflect ‘true’ market rents.
Government data shows that across the UK, in February 2021, 55 per cent of private rented households in receipt of Universal Credit which included housing cost support had a gap between that and the rents they had to pay. The average shortfall was £100 per month.
Irrespective of this Sunak froze local housing allowance rates in cash terms from the start of this financial year.
The industry body wants the government to at least guarantee to cover the lowest 30 per cent of market rents in all areas and to introduce increases to cover average rents.
It also calls for the government to introduce a hardship loan scheme for tenants not in receipt of benefits, to help them pay off rent arrears incurred since March last year because of the pandemic.
The loans must be issued with a government guarantee, interest free and under the terms that tenants will only have to start repaying them once their incomes recover from the pandemic.
If not then tenants will be in real danger of not only losing their homes but having their credit score seriously damaged so as to stop them being able to find alternative accommodation.
The report also found that 26 per cent of tenants in Covid related arrears said that their landlord had tried to reclaim them with court orders.
A spokesperson for the industry body said: “The Chancellor has clearly decided on a strategy of making landlords the scapegoats for a crisis of his own making.
“For less than the cost of the ‘Eat Out to Help Out Scheme’ he could provide landlords and tenants with the financial support they need to keep tenants in their homes and prevent damage to credit scores.
“Landlords want to sustain tenancies wherever possible, but without the support so many desperately need, the Chancellor will need to accept the tragic costs of his failure to act.”