Chancellor’s job support package is not enough to protect struggling tenants, say landlords

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Landlords have rejected the Chancellor’s extended Job Support scheme which is intended to help businesses affected by current and future local and national lockdowns preserve jobs.

Sunak said today that the government will pay two thirds of employees’ salaries and offer cash grants to businesses told to close during the pandemic this winter, of up to £3,000.

But the proposals have been criticised by the National Residential Landlords Association, which reckons these local ‘furlough payments’ will not be enough to help renters who are already behind in their rent due to Covid.

“The impact of local lockdowns makes it even more important that the Chancellor acts without further delay to bring in a package that will help tenants and landlords to sustain tenancies,” says its Chief Executive Ben Beadle (left).

“Landlords cannot be expected to subsidise tenants who are struggling to meet arrears indefinitely.

“The Government should develop tenant hardship loans such as those in Scotland and Wales to support renters in England who have built arrears since lockdown began in March but are not in receipt of benefits. 

“There also needs to be extra support for those who rely on benefits to meet their housing costs.”

The scheme will start on November 1st and last for six months.

“I have always said that we will do whatever is necessary to protect jobs and livelihoods as the situation evolves,” says Rishi Sunak.

“The expansion of the Job Support Scheme will provide a safety net for businesses across the UK who are required to temporarily close their doors, giving them the right support at the right time.”

Read the HM Treasury announcement in full.
Read more about how Covid is hitting poorer tenants hardest.

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Will life-long renting for the many be the outcome of Covid?

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With interest rates at all-time lows (bordering on negative rates), house prices are being pushed to record levels to the detriment of first-time buyers. They need a mortgage to cover on average 7.8 times their annual earnings, that figure compares to around 3.5 in the early 1990s.

But could all this be good for the rental market?

Research shows that would-be first-time buyers are finding it increasingly difficult to secure a home, and the economic effects of the Covid pandemic are making it even worse. Recent figures show that around 22% of aspiring first time buyers in the UK are still living with parents, and a good proportion of those believe they will have to do so for five years or more to save enough for a house deposit.

If it’s any consolation for those seeking ownership, the situation in the United States is probably worse. High demand, low supply and low mortgage rates have also driven up home prices to historic highs during this summer.

One investor landlord who invests in multiple family housing, Grant Cardone, is quoted in a recent Yahoo Finance article entitled The US will ‘become a renter nation’, as saying:

“Home-ownership is still dead in this country (United States) because the only people that are buying homes right now are people that have equity, great credit and a job… We’re going to become a renter nation in this country… Renting will become the economic choice and the desirable choice again…”

In the United States, currently for every $1,000 price increase, some 150,000 potential buyers are priced out of a home purchase, keeping them in the rental market.

One glimmer of hope for UK hopefuls is the Prime Minister’s statement recently that he wants to repeat the Thatcher home buying revolution, to turn “generation rent into generation buy”. Would new state-backed 95% mortgages help to get struggling homebuyers on to the housing ladder?

Despite the Prime Minister’s enthusiasm for such a scheme, he failed to mention in his speech to the Conservation Party conference how this would actually be achieved. Before the Covid crisis large mortgages with a five per cent deposit were available to those with sufficient savings, but since Covid hit, most of the major lenders, including the likes of Santander and HSBC, have simply pulled out, with virtually all of these deals cancelled until further notice. Even the few 90 per cent loan-to-value deals still available require stringent financial health checks.

Those getting a foot on the first rug of the housing ladder have moved way up in the age brackets, with home ownership even among those aged 35-44 having plunged, according to the Office of National Statistics (ONS) – its a fact that now adults in their mid-30s to mid-40s are three times more likely to rent than 20 years ago

Before the pandemic rising house prices and sluggish wage growth had left many middle-aged people priced out, but now with Covid it’s looking even more likely that people will have to rent for much longer, some with no choice but to become life long renters.

In American as here, renters have higher rates of unemployment, less savings for a down payment and consequently lower credit scores than they did before the pandemic. Renters are now more likely to fall behind on rent payments and more likely than owners to lose their jobs during the pandemic, taking them even further away from ownership.

There is little doubt that renters of today will suffer more hardship that those – mainly the baby boomer germination of over 65s, who were lucky to find it relatively easy to achieve ownership early on.

According to some research by The Royal London insurance company, homeowners without a mortgage can expect to maintain their living standards on a pension pot of about £260,000, while someone who rents privately would need almost double this, or about £445,000.

So for the one-third or people renting now who find this an attractive proposition, especially as the Covid crisis has had the effect of reducing rent levels, the prospects for them in older age are not as attractive. However, there are some advantages for older people renting, such reduced maintenance responsibilities and costs at a time when people could find it harder to maintain their home.

Finally, in America, to emphasise the difficulty for renters, says Cardone: “Homeownership is being driven by the upper class … You need a job that is secure, they’re [the banks] going to look at how you actually went through March, April, May and June with your job. If that was even slightly suspect, you’re not gonna get a home loan… You need a better credit score than you needed before Covid, and you need to secure a job.”

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How disgraced footballer cleaned up in the end-of-tenancy game as he tackled pitch ban

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A footballer who was banned by the FA for making bets turned to the property sector for an income while away from the beautiful game.

Last September, former Bromley player George Porter admitted making hundreds of bets while playing for Leyton Orient, Burnley, Welling and Bromley over an eight-year period.

But rather than going off the rails or feeling sorry for himself, Porter set up his own cleaning company doing end-of-tenancy cleaning while he waited to get back on the pitch.

He told Kent Online: “I didn’t have an income but something good came out of that because I’ve set up my own business, so I’m tying that in with football and it’s brilliant.

Cleaning up

It’s a commercial cleaning company, so I work for estate agents and we do end-of-tenancy cleaning, stuff like that. I’m on the books of two estate agents and it’s going well.”

Porter placed a total stake of £5,147 across the 473 bets from December 2011 to May 2019, scooping £2,754 but making a net loss of £2,392. Players, staff and officials at all levels of football are banned from betting by the FA.

He’s now happy to be back playing for Maidstone United, adding: “I’ve come out the other side. I’m over it now and it’s made me even more hungry.”

Porters covers the London/South East London area, specialising in start and end of tenancy cleaning, carpet and upholstery cleaning, after builders cleaning, furniture assembly/removal and office cleaning.

Get advice on end-of-tenancy cleaning checklists.

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NRLA wants English Government to follow Wales and Scotland for PRS help

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The NRLA’s submission to the government is calling for a package of financial support for landlords and tenants to assist with Covid-19 related rent arrears ahead of the publication of its Comprehensive Spending Review.

Unlike the recent announcement by the Welsh government introducing a tenant loan scheme paid directly to landlords or agents there has been no financial support offered in England for rent arrears other than a ban on tenant eviction.

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Tenant wants to use a rent Guarantor Company?

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Have any landlords had experience of accepting guarantees from a rent guarantor company rather than a tenant’s relative or close personal friend?

I have a potential tenant who wants to offer one of these companies (Housing Hand) and use them as the rent guarantor.

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