Get ready! Rent arrears to reach 15% off all tenants by end of 2021

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Tenants and landlords face months of insecurity, mental stress and hardship as a slow burn of evictions continues until at least 2022, according to a hard-hitting new report.

LSE London and Trust for London predicts that even if we return to some sort of normality by the end of next year, the long-term arrears and loss of credit-worthiness among tenants, and loss of income and confidence for landlords will continue to scar both individuals and the private rented sector for years.

As a solution, the report calls on the Government to introduce low-interest loans for tenants, paid directly to landlords – something the NRLA has been campaigning on for months now.

The dire warnings in the Where Now for the Private Rented sector? report include a possible 50,000 formal evictions in the next 12 months – at least three times the number before COVID-19 – leading to a possible extra 30,000 households in temporary accommodation.

700,000 tenants

The LSE believes that assuming the growth in arrears – starting from 6% in July – is closely correlated with unemployment, by mid to late 2021, arrears could be between 12.6% and 15.6% of all tenants – affecting up to 700,000 tenants and their landlords.

Christine Whitehead, emeritus professor of housing economics at LSE, says: “We’re likely to see a slow burn of evictions that will go on at least into 2022.

This will leave more and more tenants – and sometimes their landlords – facing months of insecurity, mental stress and hardship.”

Whitehead (left) adds: “Although so far local authorities have seen little evidence of illegal evictions, there are plenty of lodgers, sofa surfers and others with few rights ‘asked’ to move on.

“The end of furlough, the continuing growth in unemployment in response to a less generous support system, and continuing lockdowns can only make things worse.”

The LSE suggests that to avoid “catastrophic future problems”, the private rented sector needs to remain sustainable and recommends that local authorities continue to use their homelessness prevention powers.

Read the report in full.

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Airbnb to set up £760 million fund to support landlords and hosts

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Airbnb founder Brian Chesky (above) has written to the company’s four million hosts and landlords to reveal that he is to set up a global $1 billion (£760 million) ‘endowment’ fund to support both those who let out property via the platform and the communities they operate within.

Called the Airbnb Host Endowment Fund, his announcement is a reaction to criticism that short lets platforms like Airbnb ‘take’ from communities and housing markets, but rarely ‘give back’.

Chesky says the fund will be used to support hosts and landlords both with local projects to support communities and financial resources for hotst/landlords that will last for ‘generations to come’.

The Host Endowment will be established via 9.2 million shares from Airbnb which, at an estimated IPO prices of $34 (£25) would make the fund worth $312 million (£236 million), so hosts around the world would have some time to wait for the fund to reach a value of $1 billion.

Airbnb says ‘funding decisions’ will be made following input from hosts, who will also be consulted directly on how to make Airbnb better.

The four key areas where the fund will spend money include:

• Emergency funds for hosts in times of crisis.
• Investment in new products to support host success.
• An annual payout to a select group of hosts who most advance the Airbnb mission.
• Grant programs to support education costs for hosts and their families.

“It’s been a difficult year, but I’ve been inspired by how resilient you are, and how quickly you’ve adapted to the changing needs of guests,” Chesky says in an email sent out to all hosts.

“More importantly, I’ve been moved by your compassion. You are some of the kindest people I’ve ever met. You have faith in others and trust them enough to stay in the most personal of spaces – your own home.

Read more about the fund.

Picture credit: Airbnb Inc

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Research into sustainability at lowest end of the Private Rented Sector

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Property118 is no stranger to assisting the Univerisity of York with research.

In 2014 Property118 members’ contributed significantly to this 183 page report.

Dr Julie Rugg and Dr Alison Wallace, both research professors at the Univerisity of York are now seeking your help again.

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Let’s create more first-time buyers by making private tenants homeless!

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The recent policy announced by Boris Johnson that he will turn ‘generation rent’ into ‘generation buy’ by under-writing mortgage deposits for first-time buyers (FTBs) is outrageous and a non-starter for reasons I have outlined today on conservativehome. Click here 

Due to word limits

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Studies show that the majority of tenants prioritise their rent payments

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A new analysis from Freddie Mac, the US Federal Home Loan Mortgage Corporation (FHLMC), using a multifamily research group’s data, examined five major resources capturing rent payment information. It concluded in a new report that overall rental payment performance has remained strong in the face of the pandemic and the economic downturn.

The Freddie Mac studies found that, on average, 93.6% of renters paid full or partial rent in May and 94.2% paid full or partial rent in June. The findings are said to closely align with the National Multifamily Housing Council (NMHC) Rental Payment Tracker, which reported 95.1% and 95.5% respectively.

Steve Guggenmos, vice president of Multifamily Research and Modeling at Freddie Mac says:

“The surveys analysed in this report provide valuable insight into the rental market during this unprecedented time and it is important to consider what each source captures and how that fits into the bigger picture… The data shows that rent payment has remained healthier than some market participants anticipated throughout the crisis because renters are prioritising making their rent payments, even in financially stressed households.”

In the US, “Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we’ve made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders and taxpayers.”

An Independent British think tank, The Resolution Foundation, on the other hand, has found that private and social renters are bearing the cost of redundancies during the coronavirus recession. It is warning that more tenants are likely to fall behind with housing costs than people with a mortgage.

Nearly one in eight (12.5%) of private renters cannot now meet their housing costs in full, according to a new report – Coping with housing costs, six months on

This Resolution Foundation report, which is based on a survey of more than 6,000 adults in the UK, argues that some urgent measures are needed to protect households as the country enters a second lock down.

Despite some improvement in the UK labour market since the spring, says the report, housing costs continue to be a serious concern for many as workers struggle to cover rent and mortgage payments.

The report says that around 8% of private renters and 7% of social renters have lost their jobs since the start of the pandemic, compared to just 3% of those paying a mortgage.

Lindsay Judge, the research director at The Resolution Foundation, has said:

“As lockdown measures continue to ramp up around the UK, high housing costs are making the ongoing economic situation even worse for many families.”

The National Residential Landlords Association reports that up to 300,000 renters are still on the chancellor’s furlough scheme, which was set to end on Saturday 31 October, but is new set to be extended. This should bring some welcome relief in the short-term.

The Resolution Foundation is calling for tenants in England to be given interest-free government loans, similar to the schemes introduced in Wales and Scotland.

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New figures reveal rental market bounce back since May but will new lockdown spoil recovery?

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Rental market activity bounced back aggressively during the three months that followed the first lockdown, new analysis has revealed, and continues to do so now.

While market activity slumped by 31% during the March to May lockdown months, from the beginning of June to the end of August the number of new tenancies increased by 22% year-on-year, says deposit replacement scheme Ome.

Its analysis of market activity reveals that there were 125,932 new tenancy deposits protected with the Government authorised scheme mydeposits during June, July and August.

This compares with just 98,412 during the same period last year.

And the bounce-back continues; during September 49,146 new tenancies were taken up, the highest monthly figure so far this year.

Ome co-founder Matthew Hooker says the rental market’s quick return to normal transaction levels is down to both demand bottled up during the lockdown and many renters realising their current homes are too small.

“One of the great benefits of a strong private rented sector is the flexibility it offers to those that have reassessed their living conditions and now want something different,” says Hooker.

“The post-lockdown rebound is encouraging because it shows confidence and willingness from renters to expand their horizons and readjust to their current circumstances.

“This flexibility to adapt and overcome, rather than make do with arrangements they had made prior to the pandemic, highlights just how buoyant, resilient and adaptive the private rented sector can be.

“Ome was born out of the need for renters to have greater financial flexibility and choice.”

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Holiday let, an annex and a narrowboat

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I have a cottage in south York, with the potential to create a small annex with a separate entrance.

I plan to live on my narrowboat most of the year, but with me occasionally staying in the annex

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Online Super-Show Tuesday 3rd November with over 1200 minutes of free content!

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Over 2000 landlords took part in our inaugural online show for the Midland and Manchester areas on the 8th October. Now, our attention turns to the national show on Tuesday 3rd November where we are expecting an even bigger event.

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Banks and building societies agree with regulators to extend mortgage holidays

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Banks and building societies have agreed with regulators and HM Treasury to extend the provision of mortgage payment deferrals of up to a maximum of six months in the light of the tightened Covid-19 restrictions announced by the Prime Minister this evening.

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Furlough scheme and mortgage holidays extended plus additional business grants

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Chancellor, Rishi Sunak, confirmed the Coronavirus Job Retention Scheme has been extended for a month with employees receiving 80% of their current salary for hours not worked along with further economic support announced for Lockdown part 2.

The government’s Coronavirus Job Retention Scheme also known as the Furlough scheme will remain open until December

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