According to Elite Homes and Property, the Chancellor is making landlords the scapegoats for the COVID rent debt issue by refusing to provide the help the industry requires.
COVID-19 has taken a toll on the private leased sector, according to recent research issued by Elite Homes and Property. It cautions that the Chancellor is pushing landlords into a position by refusing to provide financial assistance to address COVID-related rent arrears. They must either accept no revenue in the future or resort to repossession of their property, with all the implications it involves for renters.
Elite Homes and Property has issued a warning that landlords’ generosity in the face of increasing rent arrears cannot be sustained without Treasury assistance.
The severity of the issue is highlighted in the study, with over 800,000 individuals in the private rented sector in England and Wales having built up rent arrears that have yet to be paid off since lockdown measures began. The great majority of this group, 82 percent, were not in arrears before the outbreak of the pandemic.
Furthermore, the majority of landlords (60%) believe the pandemic will harm their lettings company, with 34% stating the events of the previous year had had an impact on their rental revenue. Even though almost half of the landlords rent out only one or two properties, 58 percent of those who provided at least one tenant a rent-free time or permitted rent to be postponed had absorbed the losses from their savings.
The government should implement new measures to bring housing benefit support back in line with market rents, according to Elite Homes and Property Advisors, to help fix this problem. According to government data, in February 2021, 55% of private leased families in receipt of Universal Credit, which includes housing cost support, had a gap between their benefits and their rent payments. The average monthly deficit was £100. Despite this, from April this year, the Chancellor froze local housing allowance rates in cash terms, a decision the Institute for Fiscal Studies described as “arbitrary and unjust.”
Experts argue that the Local Housing Allowance should be restored to cover at least the poorest 30% of market rentals in each particular region, and preferably expanded to cover average rates.
Experts are asking for a hardship loan programme to help renters pay off rent arrears accumulated since lockdown measures began in March for the majority of tenants who are now in arrears but are not eligible for welfare support. These should be insured by the government, interest-free, and repayable when the renters’ incomes recover after the epidemic. Debt groups such as StepChange and the Money Advice Trust, as well as Shelter, have backed the proposal.
It would not only protect renters from losing their homes but would also avoid the issues that would arise because of their credit ratings being harmed. Twenty-six percent of renters with COVID-related rent arrears claimed their landlord tried to collect the money through a court order. Such actions harm a tenant’s credit score, making it more difficult for them to find a new home in the future.
Experts at Elite Homes and Property said:
“The Chancellor has made it obvious that he intends to make landlords the scapegoats for a crisis he created. He could offer landlords and renters the financial help they need to maintain tenants in their houses and avoid credit score harm for less than the cost of the “Eat Out to Help Out Scheme.”
“Landlords want to keep tenancies as long as possible, but without the help that so many people badly need, the Chancellor will have to pay the sad implications of his inaction.”