Landlords on a Cliff Edge with Covid-19 Rental Debt on the Increase

landlords raising covid rental debt

A statement from the NRLA (National Residents Landlords Association) has been published, highlighting the lack of government action to address the increasing COVID-19 rental debt for private landlords and renters across the nation. With the end of furlough and the recent benefit cuts, thousands of renters and landlords are finding themselves in a very bleak place, with many renters facing redundancy and landlords unable to keep up with mortgage payments.

A warning from the Bank of England states that renters are the most likely candidates for post-furlough redundancy, leaving them unable to pay their rent and facing mounting debt, thereby increasing the probability that many landlords will be forced to default on their BTL mortgages.

According to a report by the NRLA and acknowledged by the government, the number of renters finding themselves unable to pay their rent has tripled from 3% to 9% from 2019 to the end of 2020. Now that furlough has come to an end alongside the universal benefit cut, the expected number of people in rental arrears is expected to rise significantly.

The report strongly recommends that the government take decisive action by offering what the NLRA is calling an interest-free “hardship loan” to assist renters who are at risk of accruing unsustainable debt. The funds would allow the renter to clear rental arrears and would follow similar schemes already introduced in Scotland and Wales. The report also calls for the government to scrap the £20 a week cut to Universal Credit, pointing out the inevitable devastating consequences it will have on renters across the UK.

The needs of landlords have often been overlooked, with them not having the value attached to them that by rights they should, considering the importance of maintaining a healthy private rental sector. With many businesses and individuals across the UK suffering financially in one way or another due to the pandemic, little thought has been given to the plight of landlords. The NRLA is using its influence to try to get much-needed help for landlords, not just tenants, voicing the importance of helping them deal with non-payment of rent arrears.

Landlords would be wise to take advantage of the advice and support available to them in regard to BTL (buy-to-lead) products, refinancing options, and evaluating their current situation. It is vital that the support is there, with many lenders doing their bit by offering competitive loan products and relaxing criteria. It is, however, ultimately up to the government to provide the bulk of this much-needed support in the wake of the COVID-19 crisis.