Tenants may fail referencing

With covid rent arrears fears on the rise, the NRLA has raised more concerns around whether there will be enough tenants who will be able to pass referencing checks in the next few years.;

Tenants with rent arrears due to the pandemic are finding it hard to secure accommodation as their credit scores may have been affected.

The National Residential Landlord Association (NRLA) claims that as many as 210,000 renters are in this position.

There is a risk that the number of tenants able to pass strong referencing checks could dwindle.

Private tenants

The association surveyed some 2,000 private tenants ahead of the easing of restrictions earlier this month.

7% of those surveyed had built up arrears since the start of the pandemic, some 15 months ago.

25% of those who have accumulated arrears said that their landlord had attempted to reclaim the rent through a court order.

Such orders, where successful, could damage a tenant’s credit score, meaning they would likely fail referencing in the future.

Data analysis

The data, gathered by Dynata for the NRLA, also shows the average amount of rent, owed by those with arrears, is now approaching £900.

Around 30% of those who owe rent, owe £1,000, or more.

The NRLA suggests over 80% of those renters in arrears, were not in this position, at the start of the pandemic.

They also raise concerns that the majority of tenants do not qualify for emergency housing from councils.

NRLA’s chief executive Ben Beadle commented:

“As the private rented sector moves out of lockdown measures, the Chancellor has failed to provide tenants with the support they need. This is especially the case for the majority of those in rent arrears who do not qualify for benefit support.

“Without urgent assistance, many tenants face the prospect of losing their home needlessly as landlords struggle to shoulder the cost of arrears. Affected tenants also potentially face the negative impact of damage to their credit scores.

“The government needs to develop a financial package which ensures that benefits cover the rents of those in receipt of them. For those who do not qualify for benefit support, an interest-free, government-guaranteed tenant hardship loan should be established, similar to those in Wales and Scotland.”

Landlords at loss

Whilst most landlords have been accommodating during the pandemic, being understanding about furlough and job losses up and down the country, this is a source of income for them.

With the notice periods being shortened and the eviction ban lifting, there is hope that some landlords will be able to regain access to their properties, after a troubling year.

The concern regarding referencing is a real one, as these tenants with rent arrears who do not qualify for emergency housing will not simply disappear.

If the data is correct regarding how many tenants now have rent arrears, then landlords will have limited options in the future as to who they rent to.

This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.