Evictions ban extended until August

Tenants with rent arrears will be relieved that the evictions ban has been extended – but is it fair to landlords?

The evictions ban has been extended to 23 August. The government made the announcement on Friday, as it came under increasing pressure to rollout further emergency measures to help renters beyond the original 29 June deadline.

This is great news for tenants facing financial hardship and we welcome the move to give renters certainty and security. But allowing them more time to repay arrears directly impacts landlords who may themselves be struggling to pay the bills.

Mary-Anne Bowring, group managing director at Ringley and creator of automated lettings platform PlanetRent, comments: “With all the uncertainty going on at the moment, tenants deserve to be protected by the government from evictions if they have not been furloughed or risk losing their job through no fault of their own. However, we believe there must be genuine fairness in the government’s approach and this initiative must be balanced by proving that tenants’ income has gone down.

“One concern is that many landlords are retired. According to the English Private Landlord survey retired people account for 33% of landlords. They may not have a mortgage to claim a repayment holiday on, relying on their property for income – and without rent or furlough monies coming in, they may struggle to make ends meet. So it is vital that tenants do not use the extended eviction ban as an excuse to mistreat the property they live in or to withhold rent if they are not in a genuinely financially difficult situation,” says Mary-Anne.

At Ringley, we continue to press the point to our clients that tenants and landlords should be working together in what is a difficult time for all of us. Recent research by the National Residential Landlords Association points to the fact that this is already largely the case, with the majority of landlords trying to work with their tenants to resolve issues such as rent arrears.

Longer-term, we think the government may need to consider other ways of financially supporting households post-crisis. For example, through higher housing benefit payments. Clearly, the high cost of the furlough scheme means it cannot last indefinitely. Some renters may need extended financial assistance from the government but cancelling rents or getting the government to pay would ultimately be hugely damaging. What do you think?

www.planetrent.co.uk

Why not READ our Property Blog too: www.ringleypropertyblog.co.uk

Rental sector can’t meet demand for homes to let

As lockdown is eased, demand is currently outpacing supply, but London is seeing rents fall.

The rental sector is taking off again as lockdown restrictions are eased. But for renters, it’s very much a game of two halves. As we blogged yesterday, around 2.6 million renters are estimated to be in rent debt or likely to find themselves in arrears as a result of the pandemic. And landlords are feeling the financial fallout too. So unless they are able to come to suitable payment arrangements with their tenants, there could be a flood of evictions when the government lifts the repossession ban – currently scheduled for 25 June unless steps are taken to extend the embargo.

Clearly, this is bad news for tenants in financial hardship. But it may benefit those whose jobs have been unaffected by the pandemic and who now want to move, giving them more choice as those properties come back onto the market later in the year.

In London, property agent Chestertons explains that the outlook for landlords is being impacted by the fact that fewer people are willing or able to move to the capital due to the pandemic. The agency told Letting Agent Today that rents in London have dropped by between 10% and 15% as a result. Fewer students, fewer corporate rentals and tenants worried about their income are all making the situation worse, as is the trend for renters to try and negotiate lower rents with landlords, says Chestertons.

In the rest of the country, the story is a more positive one. According to Rightmove, demand for lettings is up by 22% compared to last year, with the online property specialist telling the BBC that the easing of lockdown has released “two months of pent-up tension”.

Lockdown break-ups, forced moves and the wish to relocate away from cities is driving the market, and the pandemic has left many people with “an immediate housing need” according to Rightmove. At the same time, buy-to-let landlords are exiting the market due to worries about finding financially sound tenants, while those that continue to let property are likely to be hand-picking the tenants with the best references and credit records. All this adds up to high demand for fewer rental homes. So we can expect to see rents rising and more people struggling to find an affordable home – unless we see that potential spate of evictions bringing many more rental properties onto the market.

The market is in an interesting place and, with coronavirus likely to be with us for some time to come, it’s hard to predict what the rest of the year will bring for landlords and tenants. What do you think?

www.planetrent.co.uk

Why not READ our Property Blog too: www.ringleypropertyblog.co.uk

Will there be a post-pandemic rental crisis?

With an estimated 2.6 milion tenants at risk of arrears, is there a rent crisis looming?

There is a “looming crisis in the rental sector” due to the financial hardships being faced by both landlords and tenants as a result of the coronavirus pandemic. This was the verdict of the Housing, Communities and Local Government Committee, which published the interim report in May from its call for evidence to examine the effect of the pandemic and Government support for tenants. Committee chair, Labour MP Clive Betts, told the BBC last week that the UK is currently in “the lull before the storm.”

Key points from the committee’s report are:

  • A recommendation to bring forward legislation to amend the 1985 and 1988 Housing Acts to allow judges to use discretion where a tenant is in rent arrears due to the coronavirus crisis for the next 12 months at a minimum. Discretion could include consideration of whether a pre-action protocol has been complied with.
  • The Government must accelerate its plans to introduce the proposed Renters’ Reform Bill to Parliament and abolish ‘no-fault evictions’ under section 21 of the Housing Act 1988 within the next 12 months. By amending the Act to allow judges to exercise discretion, the Government will have time to deliver a Bill that provides greater security for tenants.
  • The Government must ensure that the Local Housing Allowance (LHA) rate is set at a level that reflects real market rents and ensures those in need are able to afford properties in their areas.

The committee believes that unless the Government amends existing housing legislation, its plans to introduce a pre-action protocol to the private rented sector will be toothless. This poses the danger of a cliff edge of evictions once the moratorium on possession cases ends.  

Research from the Resolution Foundation published last weekend reveals that one in eight private sector tenants have fallen into rent arrears to-date. And as the impact of the pandemic on the UK economy really starts to bite, Citizens Advice calculates that around 2.6 million tenants could find themselves in rent arrears.

The National Residential Landlords Association told Landlord Today that more than half of its members have already experienced some combination of rent payment problems or unanticipated void periods. Some landlords who already had possession cases for rent arrears going through the courts prior to the ban, could find themselves trying to cover more than a year’s worth of rent if the courts are unable to resume existing cases from the planned date of 25 June. So it is calling for a “careful re-opening of evictions needs”. 

Of course, landlords who do find themselves in financial difficulty can ask their lender for a mortgage holiday, but the reality is that this only pushes payments further down the line – and may ultimately impact their credit rating.

In London, more than 2,500 households have agreed not to pay their rent thanks to a campaign by the London Renters Union. The LRU is calling on tenants to withhold their payments to landlords if they find themselves in financial hardship One activist told Landlord Today that the government is prioritising landlords’ profits over renters’ survival. “Right now, it must suspend rent, cancel rent debt and make the eviction ban permanent, she said. “Otherwise we’re headed for a chaotic rent debt and eviction crisis.”

However, the official guidance from the MHCLG remains clear.  Landlords and tenants should work together to address any concerns and find solutions to overcome rent arrears, such as an affordable repayment programme. This is very much our view too.

But will this approach be enough to prevent the pandemic causing widespread problems for landlords and their tenants? What do you think?