Tenant Hardship Loan announced in Scotland

Scotland follows Wales with Tenant Hardship Loan, to fund unpaid rent. NRLA calls out to landlords to lobby their local MP for support. UK regeneration areas analysed for property investment opportunity.;
Tenant Hardship Fund - Scotland

The Scottish government have announced a new £10million support scheme for tenants that are struggling to pay their rent due to Covid-19.

Although the government are yet to set a specific date, they have confirmed that Tenant Hardship Loan Fund will be made available ‘later’ in the autumn.

The scheme will give tenants the option to take out an interest free loan, to support not only tenants who are experiencing financial hardship but also landlords that have suffered from a loss of income over the course of the pandemic.

It was also announced that the Discretionary Housing Payment (DHP) fund, which helps tenants that are receiving housing benefits, will be increasing by £3million, taking the total to £19million. This is in addition to, the £60 million DHP budget that is currently being used to alleviate bedroom tax.

Announcing the initiative, Scottish Housing Minister, Kevin Stewart explained:

“This new £10 million fund, along with a further increase in our Discretionary Housing Payment funds, will mean that no one should be left in a position where they cannot access support to pay their rent.

“The intention is that this fund will open in November for those unable to access other forms of support to help meet their housing costs. We have been clear that no landlord should evict a tenant because they have suffered financial hardship due to the pandemic.

“I fully expect landlords to be flexible with anyone facing such challenges, signposting them to the sources of financial support available, and tenants in difficulty should engage with their landlord and seek advice on the options open to them.

Will England follow?

As it was previously announced by Housing Minister Robert Jenrick that the eviction ban and notice period would be extended, many have urgently called upon the government to introduce similar measures in England.

Responding to Stewart’s announcement, Policy Director for the National Residential Landlords Association, Chris Norris stated:

“We welcome today’s announcement which follows similar steps taken in Wales and we call on the UK Government to introduce similar help for tenants in England. The best way to prevent repossessions is to tackle the root cause by ensuring tenants are able to pay their rent.

“Although landlords have been doing all they can to support tenants struggling to pay their rent because of the pandemic, it is not sustainable to expect rent arrears to build indefinitely with no hope of paying them off.

“Once again the UK Government finds itself trailing behind the rest of the UK. It is time to deliver a similar scheme to support tenants and landlords in England.”

In a letter to the Prime Minister, the NRLA encouraged the government not to extend the eviction ban any further, and suggested for them to introduce a similar interest free loan that would be paid directly to landlords.

It is important to bear in mind that some tenants may refuse to apply for a loan, especially if they know that they are protected by the eviction ban.

In this scenario, the NRLA have suggested for the government to introduce income support for landlords to cover rent arrears in circumstances where tenants either refuse to pay their rent or just simply refuse to apply for a loan.

The pressure is now on for the UK government to introduce similar measures that Wales and Scotland have taken.

Support needed for landlords

The ongoing attempt to call upon the government to introduce alternative measures to the eviction ban continues.

The National Residential Landlords Association (NRLA) admits that England is now trailing behind the rest of the UK in providing support for renters and landlords, and demand justice for landlords.

Research conducted by the NRLA shows that whilst the majority of tenants have been able to pay their rent on time, some have struggled.

However it’s not all bad news, the research also suggests that most landlords have reached agreements with their tenants to manage rent arrears, maintain tenancies and continue positive relationships.

Whilst this is positive, Ben Beadle, Chief Executive at the NRLA points out that this should not detract us away from the impact that the ban has had and will have on landlords and tenants in the future.

Justice needed

The NRLA have said that the decision to extend the ban and tenant notice period has left landlords ‘powerless’ to address domestic abuse and anti-social behavior caused by tenants.

Landlords have not been able to take relevant action against tenants whose rent arrears are not associated with the Covid-19 pandemic, especially as some tenants are taking advantage of the eviction ban and are purposely not paying their rent.

Furthermore, for many people that have rented out their homes whilst they have been working elsewhere, still cannot gain access to their own properties.

Whilst the NRLA explains that there has been some much needed clarity regarding the tenancy notice period, it is now necessary for the courts to open and begin hearing repossession cases to prevent a backlog and take action against those tenants that had built up rent arrears prior to the pandemic.

Can you help?

The NRLA have reached out to the Prime Minister on several occasions to encourage change, and they now call upon landlords across the nation to do the same.

Beadle states that the government needs to be put under increased pressure to act, and encourages landlords to make their voices heard. He explains:

“I am asking you to urgently email or write to your MP, or arrange to have a chat with them at their virtual surgery, or a physical one if they are holding them.

“We need MPs to see for themselves the difficulties being caused by the government’s failures to support the market properly. The NRLA has prepared comprehensive resources to support you in doing so on our website.”

Regeneration hotspots offer investment opportunities

Various regions within the UK have been identified as ‘regeneration hotspots’, which may offer opportunity for buy to let investors.

Howsy, a letting management platform, analysed 34 areas as part of the research, all of which are currently benefitting from government investment. To get an accurate representation, Howsy rated them based on which areas offer the best available rental yield right now, using local market data.

Several aspects have been taken into consideration when analysing each area, including government infrastructure, spending and investment.

The outcome

The figures show that the regeneration of the Dundee Waterfront, one of Western Europe’s biggest waterfront projects, had the highest average yield achieving 7.2%. The average property price in this area was valued at £146,000, with an average current rent of £881 per month.

Liverpool Ten Streets is rated the second best area for buy to let, with regard to regeneration and government investment, with an average yield of 6.4%. The average property price in this area is estimated at £123,480, with an average current rent of £657.

Liverpool has been a popular destination for buy to let investors for many years, however its neighbouring town Bootle, has caught the eye of many property investors recently.

Interestingly, Bootle has the lowest property price averaging at £90,439 with an average rent of £455, achieving an average yield of 6%.

Other areas of regeneration, currently offering investment opportunities include:

Tribeca Belfast: 6%

Wirral Waters: 5.8%

Manchester Mayfield: 5.2%

Purfleet on Thames: 5.2%

South Shields 365:5.2%

Salford Crescent: 5%

Cardiff Central Square: 4.9%

Founder and CEO of Howsy, Calum Brannan explained:

“Investing can often require a long-term vision but with buy-to-let profitability being squeezed in recent years, investing with an eye on the future isn’t a luxury many landlords can afford at the moment.

“However, that doesn’t mean a savvy investor can’t receive an immediate return on their buy-to-let bricks and mortar while also benefitting from Government regeneration further down the line.

“There are a whole host of areas currently undergoing extensive regeneration projects which will increase rental demand in the short-term due to the construction itself, but also in the long-term, as these new developments bring more job opportunities and a greater appeal for living in general.”

This is encouraging news for property investors, especially as rental demand continues to rise and given the changes to stamp duty that buy to let investors can benefit from.

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