Author : Maryanne Bowring
The Government has announced a further delay to the end of the eviction ban, which will now run until 31 May. The latest extension has met with a mixed response. The industry is not impressed. Landlords’ ability to start court proceedings has been kicked even further down the road and tenants’ campaign groups are calling for pandemic debt to be written off altogether.
This is clearly unrealistic - but how big a problem are we really talking about?
In the BTR sector, arrears have been lower than expected with the UKAA, which represents developers and providers, reporting high payment rates and very few tenants missing payments. The BTL picture is a little different, with a recent survey by the National Residential Landlords Association (NRLA) finding 7% of renters in debt - on average to the tune of between £251 and £500. That’s more than 800,000 people falling into debt, so it’s clear that something more needs to be done.
The NRLA doesn't believe that endless extensions to the eviction ban are the right approach. Instead, it’s calling on the Government to provide tenants with guaranteed interest-free hardship loans as well as boosting benefit payments.
We agree this could be a solution, although how it would work in practice remains to be seen. Who would provide the money and how would it be accessed? With furlough and additional housing benefit being paid, and rents falling in many areas, the elephant in the room is the question of why so many tenants have not yet begun adjusting their housing budget to their new reality.
We think the answer to this lies in societal and employment problems that can't quickly or easily be fixed, certainly not in time to solve the problem of tenant arrears, So of course those genuinely in need should be helped and many landlords have been able to come to arrangements to help their tenants stay in their homes. But there are tenants out there who were already in arrears pre-pandemic and landlords need to be able to take action to collect what is owed to them. Not all landlords are millionaires with big portfolios and they can't afford to keep taking a financial hit.
Mortgage repayment holidays simply increase future loan repayments for landlords and affect their credit history. Worse, banks are forcing landlords to erode their reserves. Lenders are now applying more stringent criteria when approving repayment holidays and there are even stories of BTL landlords facing the problem of unscrupulous banks seeking to put up landlord mortgage interest rates due to loan to value ratios.
At Ringley we always try and think outside the box. We needed a temp in our Manchester office - so we went through the rent arrears list and offered those most in arrears a job and an agreement to apply the remuneration to decrease their debt! Maybe it’s time for the Government to ditch the endless extensions and start thinking outside the box too.
Mary-Anne Bowring FIRPM FRICS FARLA FCABE Founder/Head of Asset Management
Strategic partnerships, holistic delivery/ opportunities, growth, value engineering, thought leadership
Ian Barber MD BTR Mobilisation & Leasing
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Jon Curtis MRICS Head of Building Engineering
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Kate Robinson MIRPM MD Blocks/FM Management (London Region)
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Lee Harle Partner Ringley Law
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Anthony Kingdon MIRPM AssocRICS MD Blocks/FM Management (North Region)
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