The firm says that some landlords are facing not just losing their investment properties but their homes as well.
Jeremy Robinson, Group Managing Director, Housing Hand, explains: “The intentions of the eviction ban to protect individual tenants are excellent, but the situation, unfortunately, doesn’t take all those involved in the rental transaction into account. The financial impact of tenants who can’t afford to pay on landlords is devastating.”
The clock is certainly ticking. According to research by LSE London and Trust for London, the number of private tenants in rent arrears in England could treble in the coming year. That could mean as many as 700,000 tenants – and their landlords – in financial difficulty.
Housing Hand points out that letting agents, too, are suffering Letting agents receive a percentage of a property’s rent as a management fee, but 15% of £0 is £0. This means that there is a limit to how long agents, as well as landlords, can continue to operate with a reduced income. Client Money Protect reported at the end of 2020 that lettings agencies were closing at a rate of ten per week. Housing Hand believes that around 4% of all letting agencies closed their doors for good during the year.
The eviction ban is currently due to run until 21 February but has the potential to be extended in line with continuing lockdown restrictions. Such a move would mean that landlords, and the letting agents whose businesses they support, could face further weeks or even months of financial struggle. For those with mortgage payments to cover, the situation is increasingly unsustainable.
Terry Mason, Group Operations Director, Housing Hand, says: “The government must stop using private landlords to house tenants who are unable or unwilling to pay their rent. These are difficult times for all concerned and a new solution is needed – one that supports all those involved in the rental sector.”
The situation highlights the value of professional rental guarantor services, which guarantee landlords will receive their rental payments, even when tenants cannot afford to pay. Housing Hand has covered £587,626,099 in rent to date, working with over 3,000 accommodation providers.
Mason concludes: “Those without a guarantor company in place are likely to see landlords increasingly turning to their personal guarantors for payment over the difficult months ahead. It’s a role that parents often fulfil, but how many of those acting as guarantors are also finding that their income has been reduced or lost entirely? The government needs to do more to step in and prop up the private rented sector in these truly exceptional times.”
