How Will the End of Furlough, Self Employment Income Replacement and the Latest Stats Affect Landlords?
The current stats as they stand (April 2021)
· 11.2 million UK citizens are currently on furlough
· 1.7 million UK citizens are currently in receipt of the self-employment income replacement scheme which is set to end in September 2021
· 6 month notice period remains in place
· Vaccinations now span all over 50’s yet the mass of the UK workforce is between 20-50 years old and therefore not yet broadly immunised
· Breathing space legislation comes into effect on 4th May. Restricting contact with tenants regarding rent arrears
· Latest UK stats are that over half a million UK tenants are in rental arrears of some form
· 56% of UK landlords have lost rental income to date across the regions.
· The average cost of eviction currently stands at £9000
The chancellor’s budget in March revealed plans for continued help for workers in Britain and other measures designed to help renters and landlords face the repercussions of the ongoing coronavirus pandemic until September of this year.
There is now a more promising outlook on the horizon in terms of being able to socialise and see family and friends again without restrictions, but in line with this, the schemes that were brought in to keep workers afloat and to avoid mass redundancies are also planned to come to an end. So how will this affect rental payments?
Highest levels of furloughed workers since March 2020
Statistics show that 11.2 million workers are currently on furlough, which is actually the highest level since the start of the pandemic. As the country begins to slowly reopen, time will tell if these workers who have remained furloughed for a period of time, will eventually be brought back into work or made redundant when the furlough schemes are set to end in September and whether employers can afford to do so.
6 month notice period remains in place
The evictions ban in England, as well the requirement for landlords to provide 6-month notice periods to tenants, has been extended until 31 May 2021. Exceptions remain in place for the most “egregious cases”, including illegal occupation, anti-social behaviour and arrears of six months’ rent or more.
Breathing space legislation
The dept respite scheme, also known as breathing space comes into effect in May this year. This will give someone in ‘problem debt’ the right to legal protections from being chased up by creditors – and as this applies to the rental sector, it is likely to protect tenants from being chased up by landlords or their letting agents.
The new details as set out on the Gov.uk website say there will be two types of breathing space – a standard breathing space and a mental health crisis breathing space. A standard breathing space is available to any individual with problem debt and gives them legal protections from creditor action for up to 60 days.
A mental health crisis breathing space is only available to a client who is receiving recognised mental health crisis treatment. If an approved mental health professional certifies a client is in mental health crisis treatment, the client or someone else might ask for a mental health crisis breathing space on the client’s behalf.
The mental health crisis breathing space has some stronger protections than the standard breathing space. It lasts as long as the client’s mental health crisis treatment, plus 30 additional days thereafter, no matter how long the crisis treatment lasts.
So what could all of the above mean for you as a Landlord?
With the uncertainty surrounding whether many tenants will be able to go back to work after the furlough scheme and the income replacement scheme has finished, this could put landlords in a tricky situation and the possibility of unpaid rent is something to be considered.
This, coupled with the 6 month notice period remaining in place until the very end of May, and the introduction of the breathing space legislation could cause complications for landlords and lead to the loss of rental income. Stats outline that the average cost of eviction currently stands at £9,000.
Protecting your income with the rent guarantee
The latest UK stats are that over half a million tenants are currently in rental arrears of some form, and 56% of landlords have been reported to have lost rental income to date across the regions since the onset of COVID-19.
To ensure that your rental income is not affected when it comes to September time and job retention schemes are set to end, we recommend taking advantage of the Belvoir rent-guarantee. This means that when tenants can’t or won’t pay, you are protected, not only from rent arrears but also from any tenancy breach.
Our obligation to you is that in the event that there are any defaults in the payment of the Rent (as set out in the tenancy agreement) by the Tenant(s)/Guarantor(s) within the tenancy, we will pay rent monthly, as per the rent amount on the tenancy agreement, until vacant possession is gained.
To benefit from the Belvoir Rent Guarantee – simply get in touch with your Belvoir office, and a member of the team will be happy to assist.