More money needs to be made available to support landlords and renters during the existing Covid-19 pandemic, according to Bankrate UK.
The mortgage comparison and informational service fears that the challenges in the private rented sector are only going to increase as the pandemic continues to put a strain on the economy.
The National Residential Landlords Association (NRLA) last week wrote to the prime minister requesting that the government immediately address this current situation, especially in light of the fact that repossession cases on the grounds of rent arrears will not be treated as a priority until tenants have built over a year’s worth of rent debts.
Added to this is the six months’ notice that landlords now have to give. Where the case is disputed, even before the pandemic, courts were taking an average of nearly six months to deal with cases, with the backlog now likely to be longer.
Taking the English Housing Survey average weekly rent in the private sector of £200, this means a potential lost income for a landlord of up to two years amounting to £20,800.
The letter points out to Boris Johnson that the vast majority - 94% - of private landlords are individuals, renting out just one or two properties, and simply cannot afford to subsidise rents indefinitely.
The NRLA is warning that the government’s failure to provide any direct financial support for the sector during the pandemic means that many landlords will be forced to seek money claims against renters building arrears, and this would leave tenants’ credit scores in tatters. This is a view supported by Bankrate UK.
Nisha Vaidya, mortgage expert at Bankrate UK, commented: “The challenges in the private rented sector are only going to increase as the pandemic continues to put a strain on the economy.
“As the NRLA points out, most landlords are private individuals renting out one or two properties, rather than wealthy property tycoons. By being unable to claim their rental income, these individuals are facing real financial hardship too.
“In the current situation, landlords may have to consider remortgage deals, or may even end up selling their properties altogether. Meanwhile, renters in arrears could find that their credit scores plummet, which may prevent them from ever getting on the property ladder themselves.
“We urgently need a long-term solution that can provide financial support to both landlords and renters until life returns to some sort of normality.”