ARLA Propertymark has given a detailed response to a government consultation on how the pandemic has hit the private rental sector.
The formal and informal eviction bans are first and foremost in ARLA’s response.
Overall, the association warns that the sector could be impacted in four ways following the second wave of Coronavirus:
– Arrears are likely to rise;
– Landlords’ finances will be hit;
– Compliance will be increasingly difficult; and
– There will be a growing need for financial protection for the most affected.
ARLA says: “The government must recognise that the private rented sector has already been heavily impacted financially in recent years based on the phasing out of tax relief on mortgage interest for landlords, the additional Stamp Duty Land Tax surcharge on buy-to-let property and the Tenant Fees Act 2019. However, the ongoing repercussions of the pandemic mean that landlords’ costs have increased significantly, and many landlords can no longer make ends meet.”
It breaks the bulk of its response into four sections.
Evictions: “Our members report that a small number of tenants have taken the government’s decision to protect renters during the national restrictions and over Christmas with no bailiff enforcement action, as a green light to refuse to pay their rent.”
The association believes there is “no reasonable certainty” of how landlords can recover costs.
Financial Support: ARLA wants four actions by government:
1) Ring fenced funding delivered to local authorities and sent to tenants via the Discretionary Housing Payment;
2) A government-backed interest-free loan delivered to tenants who cannot access the Discretionary Housing Payment and paid directly to landlords;
3) Ensure Universal Credit is adequate and more effective;
4) The government should raise and restore the Local Housing Allowance to the 50th percentile to cover the average cost of rents in a local area.
Selective Licensing: ARLA wants the government to control councils pressing ahead with licensing scheme after scheme because these will hit tenants in three ways:
1) Tenants will likely see the cost of licensing passed on to them via rent increases;
2) If landlords who cannot afford the license fee decide not to pay and remove their property from the market, tenants will be forced to seek new homes;
3) With some agents furloughed or working from home they are unable to access relevant paperwork and documentation to complete licensing scheme applications and process fees.
The association warns: “Councils who are pursuing the implementation of licensing schemes are being socially irresponsible as it needlessly puts vulnerable people at risk of being infected.”
Buy To Let: “Fundamentally, landlords 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 the tenant at risk of eviction and the landlord at risk of repossession. To reduce the impact of a second wave on the private rented sector the government must take a holistic approach that considers the financial implications of both the pandemic and existing costs that landlords face.”
This post has originally been featured in Letting Agent Today.