Rental Moves To Fall By One Quarter Due To Lockdown

Rental properties
Rental moves look set to decrease by one quarter this year owing to the impact of the coronavirus lockdown, according to the latest research by property platform Zoopla. The number of moves, around 1.2m each year in the UK lettings market, is expected to drop by 25pc in 2020 compared to last year.

Consequently, it is likely the private rental sector (PRS) will face dark days as tenants struggle to pay rent and bills and landlords fear financial loss. Property owners are having to meet unexpected costs and worry that they will be left with rental homes that cannot be legally let once the pandemic is over.

As one in five private tenants stand to lose their job, Shelter, the housing charity, has warned that gaps in the benefits system mean that renters could remain in financial trouble long after the pandemic ends. The Centre for Economics and Business Research (CEBR) said that the issues facing the rental sector would be ‘the catalyst of the impending housing crash’.

Many of the jobless will need to turn to the benefits system for the first time but will find the housing benefit element of Universal Credit applies only to the cost of renting the cheapest 30pc of properties in any area. So renters paying average prices face a shortfall which could be as much as £400 per month for a two-bed family property in England and £1,227 in London.

In theory, tenants could move to cheaper properties but this is not an option during the lockdown. The Government, meanwhile, has said it has offered ‘unprecedented measures to support tenants’.

NRLA warns of landlords left high and dry

A report by the National Residential Landlords Association (NRLA) demonstrates the scale of the problems facing the sector, warning that many landlords and tenants had ‘fallen through the cracks of government support systems’.

Although landlords with a buy-to-let mortgage can claim a payment holiday from their bank and use the saving to support struggling tenants, the NRLA says that thousands of investors own rental properties outright and, therefore, cannot apply for any assistance.

Around 28pc of landlords do not have a mortgage, the association said, and many of these rely on rental income for their livelihood or to fund their retirement. For some, the crisis has caused a drop in income.

The NRLA said it had received reports of tenants cancelling their rental direct debits, believing incorrectly that they no longer had to pay. The association is also concerned that renters who have negotiated a payment break do not realise that they will still have to repay the money.

3pc of landlords could go bust

Landlords with empty or soon-to-be-vacated properties cannot let these to new tenants due to the lockdown and will have to pay council tax and utility bills in the meantime. A survey by the NRLA of 2,700 landlords found that 41pc had experienced difficulty in paying unexpected costs and that 3pc anticipated losing their business due to the coronavirus.

There are 2.3m landlords in the UK, suggesting that 79,800 could go bust, according to estate agent Hamptons International. Furthermore, there are limited options for those landlords who have attempted to refinance their properties. Moneyfacts, the financial analyst, stated that in excess of 1,300 buy-to-let loans have been withdrawn since the onset of the crisis.

Chris Norris, of the NRLA, said that although some landlords may need to sell up as soon as they can, this will only aggravate the rental supply crisis. He added that while the Scottish government is offering support to landlords without mortgages, this help is not available elsewhere in the UK.

Additionally, there are new fears that many homes will not be in a lettable condition once the pandemic is over, as gas, electricity and other safety certificates will have expired.

Although engineers are considered key workers, the NRLA said many landlords were finding it difficult to have maintenance work carried out because contractors were reluctant to enter properties especially where tenants displayed coronavirus symptoms.


  • News Desk

    Our news desk team includes a qualified architect, a freelance journalist, and a fanatical property expert who has over 12 years experience in the industry.

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