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28th Sep 2021|News|Lettings|

End of furlough brings uncertainty to tenants

The National Residential Landlords Association (NRLA) is calling for the government to supply interest-free loans to private renters, who will face a “cliff edge” at the end of the furlough scheme.

Throughout the pandemic, the Coronavirus Job Retention Scheme acted as a lifeline to millions of households across the UK. Extensions to the furlough scheme prevented a disastrous spike in unemployment by protecting jobs and income.

Estimates suggest that around 1.7 million jobs were still being protected as recently as the beginning of August, and now an independent think tank is warning that 900,000 people are still expected to be on furlough when it stops at the end of this month.

the chancellor will be turning his back on those renters and landlords in desperate need of help.

Furlough support

The scheme, which ends of the 1st of October, coincides with the removal of a £20 a week uplift to Universal Credit.

The proportion of private renters with arrears has tripled from 3% to 9% and there are concerns that more tenants, and therefore landlords, will be left without support next month.

According to data from HMRC, there are 1.6 million people on the Coronavirus Job Retention Scheme, or still on furlough.

The association has called on the chancellor to provide interest-free hardship loans, to support tenants who will lose income after the furlough scheme ends.

Similar schemes have been in place already in Scotland and Wales.

NRLA chief executive Ben Beadle says: “Many tenants and landlords have struggled to cope during the pandemic leaving them exposed to the impact of rent debts which they are unlikely to ever pay off.

“By ending furlough and cutting benefits in quick succession, and without the introduction of a targeted package to tackle Covid related rent debt, the government is worsening an already critical situation.

“Without transitional support, and as the country gets back to normal, the chancellor will be turning his back on those renters and landlords in desperate need of help.”

Rent arrears in rest of the UK

In other research published by the NRLA, rent arrears appears to be a significantly worse issue for Welsh landlords.

The findings, from BVA/BDRC, are based on extensive surveys of English and Welsh landlords and show a significant number more Welsh landlords have experienced rent arrears than their English counterparts.

42% of those with property in Wales reported that they have been impacted by issues relating to rent arrears in the past 12 months compared to only 35% in England.

Chris Norris, Policy Director for the NRLA commented: “It is troubling that rent arrears appear to be a more significant issue for households in Wales, despite the recent announcement of the Tenancy Hardship Grant.

“These figures illustrate that the scheme must be implemented as quickly and effectively as possible to prevent Wales’ rent debt crisis from worsening and threatening homes.

“We urge Wales’ private landlords to make their tenants aware of the grant and call on the Welsh Government to inform all stakeholders across the private rented sector of the fact this financial assistance measure is now available.”

What can be done?

To safeguard against the potential loss of income and costly arrears situations no doubt bound to occur after the end of furlough, we would recommend speaking to our experts about Rent & Legal Insurance which can offer you peace of mind should the worst happen. To find out more, get in touch with your local lettings manager here