Landlords shouldn’t be expected to prop up the rental market
Simon Scott (pictured), director at payments technology company, flatfair
Much of Britain’s economy has been ordered into hibernation as the virus wreaks havoc on the retail and leisure sectors. And while the furlough scheme has been a saving grace for many thousands of people working across such industries, for the private rental market such generous help has not been as forthcoming.
Despite mountains of debt piling up at the feet of landlords, they are still being expected to keep the market afloat. Quite justifiably, many feel alone in their battle to stave off the economic onslaught Covid-19 is inflicting on the rental sector. The reality is, though, that without some form of drastic action, the future for Britain’s 2.7 million buy-to-let landlords looks very bleak indeed.
Although the ban on residential evictions has been hailed a victory for tenants across the UK, few dare to draw attention to the fact that the legislation is simply plunging struggling renters deeper and deeper into debt. Unlike Scotland and Wales, which have both rolled out ultra-low-interest tenant loan schemes in conjunction with eviction bans, England continues to bury its head in the sand.
A potentially debilitating depression is on the horizon and the chancellor has reiterated time and again that he is unable to save every job. How, then, does he expect struggling renters — many of whom will have been working in unsalvageable jobs — to stump up the cash to pay off their arrears?
The government’s inaction will ultimately lead to long-term harm for both renters and landlords alike. A recent NRLA study found that more than half of landlords (56%) had lost rental income due to the pandemic, with 12% losing more than 20% of their income. Of all those who had lost rental income, 22% had lost more than £5,000 and 59% had lost more than £1,000 – with 36% saying the losses are continuing to rise.The government has so far provided billions in support packages to businesses and the wider economy throughout the pandemic, yet have consistently shrugged off landlords’ calls for help.
The reliance on landlords to prop up the market also risks many small and medium-sized operators eventually questioning whether renting out properties is worth the hassle and uncertainty. A Covid-induced exodus of buy-to-let landlords would also be disastrous for renters, as the volume of more affordable rental properties dwindles.
Covid-19 could not have come at a more turbulent time for the rental market, with the sector already experiencing enormous change in the form of build-to-rent. While smaller, more traditional landlords should always have a place in Britain, BTR is quickly gaining momentum as it lures more and more renters to myriad purpose-built schemes.
If the government is to prove that it has heard landlords’ cries for help, it will use the period between now and the end-date for the latest evictions ban to develop a long-term plan to sustain tenancies, support landlords and return the rental market to health.
Failure to do so will no only inflict permanent damage on the sector, but plunge renters into truly inescapable debt.