UK rent guarantor service Housing Hand is calling on the Government to step in and solve the issue of mounting tenant debt caused by the COVID-19 pandemic.
The company is proposing a simple rent debt loan solution that would enable accommodation providers to avoid evicting non-paying tenants.
Terry Mason, Group Operations Director of Housing Hand, says: “The Government cannot use private accommodation providers to bail out the rent arrears problem created by COVID-19.
“Action needs to be taken now, before the second wave builds, to assure both tenants and landlords that there is another option open to them aside from eviction, which in most cases both parties are keen to avoid.”
According to Housing Hand, the pending housing crisis is not one of evictions getting out of control, but the rental debt the tenants owe and how they can repay the landlords who are legally entitled to be paid. A rent debt loan, paid to landlords by the Government and then repaid by the tenant as affordability allows, could provide a simple way to avoid a huge number of evictions.
Some landlords might be able to assist their tenants by deferring or rescheduling payments, but not all can afford to. Some may have no choice but to evict perfectly good tenants due to the financial impact of COVID-19. Other landlords may even be forced to sell up and leave the buy-to-let market.
Terry Mason continues: “Almost all landlords are content with tenants remaining in their properties as long as they are paying rent, so this is the area the Government needs to address to maintain tenancies – not put a blanket ban on evictions and expect the private housing sector to foot the bill.”
Housing Hand also points out that student rental debt is building up. Student tenancies are further complicated by the migratory nature of those who hold them, along with the potential for further lockdowns and remote education.
The combination of these factors has led many students to favour a “no stay, no pay” mentality. However, that ignores the fact that student renters are still legally obliged to pay their landlords under the legally binding commitments made in their Assured Shorthold Tenancy (AST) agreements.
Some accommodation providers have agreed that students who cannot travel to the property to start the AST will be released from the contract. Some have even gone further and said that if students are told by the Government or World Health Organization to move out during the tenancy, then they will be released from the AST.
Jeremy Robinson, Group Managing Director of Housing Hand, comments: “The private rental sector is vital to the UK’s housing makeup. If tenants genuinely cannot pay their rent, the Government must step in and support them. Private accommodation providers cannot be expected to provide homes without being paid.
“In many instances, rent covers the landlord’s mortgage and maintenance costs, meaning that non-payment puts both the tenant and the landlord at risk. We need a solution in place before the second wave really hits and delivers a huge economic as well as health impact.”