Gov­ern­ment U-turn is a night­mare for landlords

Ex­tend­ing the re­pos­ses­sions ban will leave some landlords home­less and oth­ers wait­ing two years with­out re­ceiv­ing any rent

The Daily Telegraph - Business - - Business Comment - Ben Bea­dle Ben Bea­dle is chief ex­ec­u­tive of the Na­tional Res­i­den­tial Landlords As­so­ci­a­tion. It tweets @ NRLAs­so­ci­a­tion

When the Gov­ern­ment an­nounced its last-minute U-turn on end­ing the ban on land­lord re­pos­ses­sions and in­stead ex­tended it for an­other month, much was made of pro­tect­ing renters. There was no word on pro­tect­ing landlords. There was noth­ing said about how landlords with ten­ants in ar­rears now face the prospect of two years with­out rent be­ing paid. Nor any word about those who are un­able to ac­cess their own homes, hav­ing rented them out while work­ing away. Also ig­nored were those fel­low ten­ants and neigh­bours suf­fer­ing from an oc­cu­pier’s ob­nox­ious be­hav­iour, who now face at least an­other month of mis­ery.

As an as­so­ci­a­tion, we un­der­stood the need at the start of lock­down for a ban on re­pos­ses­sions. We needed to re­duce move­ment and en­sure ev­ery­one had a se­cure home in which to iso­late. Landlords were asked to work with ten­ants im­pacted by Covid to sus­tain ten­an­cies, and our re­search shows that in the over­whelm­ing ma­jor­ity of cases this has hap­pened.

When the three-month ban was ex­tended by two months, we mis­tak­enly as­sumed that a plan would be put in place to en­able it to end in a way that would pro­tect vul­ner­a­ble ten­ants while en­abling jus­ti­fied re­pos­ses­sions to go ahead. Min­is­ters gave their word that the ban would end on Aug 23.

In­stead, and with­out any prior warn­ing, the re­pos­ses­sions ban was ex­tended by four weeks. In ad­di­tion, six months’ no­tice now has to be given in cases of rent ar­rears be­fore a land­lord can re­gain posses­sion of their prop­erty. Ini­tially, only cases with ar­rears of more than a year will be heard.

Per­haps the big­gest kick in the teeth for landlords was that the Gov­ern­ment does not be­lieve rent ar­rears are deemed se­ri­ous enough for ac­tion un­til they have been build­ing for at least a year. We have to add to that the six months’ no­tice pe­riod – and where a case is dis­puted, the time taken to progress this through the courts. Even be­fore the pan­demic this was tak­ing an av­er­age of six months. Given the backlog, this will likely 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 £20,800.

It is dis­ap­point­ing, to put it mildly, that a Con­ser­va­tive gov­ern­ment seems to mis­un­der­stand who landlords are. The vast ma­jor­ity are not prop­erty ty­coons with large re­serves to fall back on. As Gov­ern­ment data show, 94pc of pri­vate landlords are in­di­vid­u­als, many in­vest­ing in just one or two prop­er­ties as a pen­sion. The av­er­age rental in­come over the pre­vi­ous 12 months was £15,000. Three in five landlords had a gross non-rental in­come of less than £20,000.

What they can­not af­ford to do is to do the work of the state in sub­sid­ing strug­gling renters. Yet that is pre­cisely what is be­ing asked of them. An­nounc­ing the U-turn last month, Hous­ing Sec­re­tary Robert Jen­rick said: “If ten­ants are un­able to af­ford their rent, we en­cour­age them to speak to their land­lord to agree a so­lu­tion.” In other words, “noth­ing to do with us, guv.” The re­sult? We are hear­ing of landlords who have been made home­less be­cause they can­not re­gain ac­cess to their homes. In some cases this is hap­pen­ing de­spite ten­ants wil­fully not pay­ing rent. It could ex­pose landlords to le­gal ac­tion if they are un­able to meet cer­tain re­quire­ments within their prop­erty as a re­sult of lost in­come. Or they could de­fault on their mort­gages.

This is also not a sat­is­fac­tory out­come for ten­ants. It of­fers no help for those who are strug­gling to pay the rent through no fault of their own due to the pan­demic, and in­stead re­wards those who pur­pose­fully are not pay­ing rent de­spite hav­ing the means to do so. It could also leave ten­ants fac­ing se­ri­ous credit rat­ing prob­lems if landlords feel they have no op­tion other than to make a money claim against them.

The sit­u­a­tion is only go­ing to get worse with fur­lough about to end. The in­crease in ben­e­fits does not cover the cost of av­er­age rents in any given area, and the mort­gage de­fer­ral scheme only in­creases costs for the re­main­der of a mort­gage. Added to that, landlords have by and large been un­able to ac­cess the Gov­ern­ment’s fi­nan­cial sup­port for busi­nesses.

The most ef­fec­tive way of pro­tect­ing ten­ants is not to ban re­pos­ses­sions – but to en­sure that they can pay the rent. There need to be in­ter­est-free, gov­ern­ment-guar­an­teed hard­ship loans for ten­ants to pay-off Covid-re­lated ar­rears, sim­i­lar to the sys­tem in Wales. These would sus­tain ten­an­cies and re­move any risk of evic­tion as fur­lough is re­moved. They should be paid di­rectly to landlords, and should cover all ar­rears ac­cu­mu­lated since the start of the pan­demic.

Where af­fected ten­ants ei­ther refuse to ap­ply for a loan or where loans are not best suited to them, there needs to be di­rect fi­nan­cial sup­port for landlords. In ad­di­tion – for what it is worth – min­is­ters must give an ab­so­lute guar­an­tee that posses­sion cases will re­sume from Sept 20. Cases in­volv­ing anti-so­cial be­hav­iour, ten­ants with rent ar­rears that have noth­ing to do with Covid and sit­u­a­tions where landlords are un­able to ac­cess their own home need to be pri­ori­tised.

The clock is tick­ing. Min­is­ters need a plan in place within the next few weeks.

‘This means a po­ten­tial lost in­come for a land­lord of £20,800’

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