One In Twelve Tenants Paying Reduced Rent
A recent story in The Telegraph claims that one in twelve tenants are being allowed by the landlords to pay a reduced rent to help them cope with the cost of living crisis.
Buy-to-let investors are ‘bleeding’ rental income losses as the onset of spiralling inflation and seismic energy bills increases causing insurmountable problems for tenants’ finances.
According to a retail and commercial bank’s research conducted with a 1,000 tenants and 1,000 landlords, around one in twelve renters – 8 per cent- said that over the past six months their landlords had agreed to them paying a temporary reduced rent, and another 5 per cent said their landlord had for the time being, for a limited period, frozen their rent.
It is widely believed by experts that the UK’s ever increasing rental costs have virtually hit the hardest of affordability levels with the cost of living catastrophe.
According to a property portal rental growth this year up to July reached 12.3 per cent and in London increased by 18 per cent.
However the Office for National Statistics shows wages in real terms dropped by 3 per cent in June which is the lowest fall since 2001.
Because of the major reductions in PRS housing supply this has meant that many landlords have been increasing rents and the bank believes that this will become unsustainable.
A spokesperson for the bank, says: “Arrears are definitely something most lenders are thinking about, it is definitely something that we are thinking about.
“We might have to think about how we can support landlords who are under pressure with their mortgage payments and we have to be thoughtful about our approach to risk.”
The bank claims that because of the cost of living crisis threatening to get even worse, lenders will almost certainly set even more stringent restrictions for BTL lending.
The spokesperson, says: “We’re not there yet, but we’re trying to grapple with where the tipping point is, which would mean we would need to adjust our risk profile. At that point, we might reduce our loan-to-value ratios, or spread out the mortgage terms.”
Think tank, the Centre for Economics and Business Research, predicts that approximately ten per cent of tenant households will fall behind with their rent payments, which is around 407,000 families and could be a third higher than during Covid.
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