Welsh loan scheme opens for applications
- Published: Tuesday 13 October, 2020
- By: Commercial Trust
The Tenancy Saver Loan (TSL) scheme is officially open for applications for private rented sector tenants living in Wales.
The scheme will be available to tenants that are in rent arrears and those who may struggle to pay future rental payments, due to the covid-19 pandemic. It will be open until March 31st 2021.
1% APR loans will be available, that will be paid directly to landlords or letting agents. Loans will need to be repaid over a period of up to five years.
The Welsh government has introduced the TSL, to provide an affordable way to cover existing rent arrears and future rental payments, with the aim of reducing the risk of tenant eviction and homelessness.
Support and advice services will be made available for tenants that apply for the loan, to help them manage their financial situation.
The Wales Council for Voluntary action will manage the loan scheme. It will be provided by seven Credit Unions across Wales.
To ensure the scheme is fair, the credit unions will firstly work with tenants to find out whether or not they are eligible for the loan scheme and how much they could afford to repay.
If eligible, the credit unions will provide them with support for the duration of the loan repayment period.
Minister for Housing and Local Government, Julie James commented:
“We recognise the constant pressure that the coronavirus is putting on tenants and landlords.
“While we have already taken steps to alleviate some of this pressure, such as extending the temporary six month notice period for eviction and funding Citizens Advice Cymru to deliver the Early Alert Scheme for rent arrears and other household debt for tenants, we want to go one step further.
“That’s why we’re supporting a low interest loan scheme that provides financial assistance for both tenants and their landlords.
“The Tenancy Saver Loan Scheme will directly support tenants who are struggling with their rent due to coronavirus to stay in their homes, address their debt and avoid eviction, whilst ensuring landlords receive the rent they are owed.
“We are committed to ensuring no-one is made homeless as a result of the pandemic and this scheme is part of our long term strategy to help people manage their debt, prevent homelessness and where it cannot be prevented ensure it is rare, brief and non-recurrent.
The NRLA have been urging the government to implement similar measures in England. However, this is still yet to be introduced.
In regards to the loan scheme opening in Wales, NRLA chief executive Ben Beadle said:
“These loans will help keep tenants who have been affected by coronavirus in their homes, while supporting landlords reliant on rental income to pay their own bills.
“We would advise every landlord with a tenant in arrears to make sure they are aware of the new scheme and advise any landlord in receipt of these payments to commit to working with their tenant to maintain the tenancy in the long term.”
Apply for a Tenancy Saver Loan
To apply for a Tenancy Saver Loan, visit the Credit Unions Wales website here.
The future of commercial property investment?
No-one could have expected Brexit to be eclipsed by any other event, but then Covid-19 happened. Setting aside the global impact of both of these, to look specifically at the commercial property investment industry, where is the next big opportunity coming from, for commercial investors?
Pre-Covid state of the industry
Retail on the high street has long been in decline.
Consumers in their droves are choosing to forgo the limits of physical shopping, the costs of fuel and parking, the sheep-like wandering and tedious queuing at tills, for the choice, price sensitivity and relaxation of shopping from their sofas.
Throw Covid-19 into the mix and suddenly this shift has been ramped up beyond all measure - perhaps by an acceleration of 5-years, some experts suggest - as even the most technically averse make the switch to digital shopping, in all of its forms.
Very few businesses have been rubbing their hands together, as the global pandemic has ridden rough-shod around the world, but online retailers may well have.
The pressure to get fulfilment of goods and services functioning efficiently online has long been on, but Covid-19 has turned the dimmer switch on the lightbulb up to sports-stadium setting.
The commercial property sector, mid-Covid
Office space has been hugely impacted by the pandemic, with businesses frantically shipping employees back home, wherever possible, in order to keep trading.
Health and safety requirements of Covid-19 often mean that pre-existing office space simply isnt large enough to keep staff at a two metre distance, even when going back into offices was possible.
For many people, the option to work from home is a very appealing one and offers employers a reduction in operating costs.
Changing the working dynamic, from one where being office-based was the rule and working from home the exception has been a trend that was, pre-Covid, on a slowly evolving journey.
But again, with the pandemic forcing the hand of this change, it is quickly demonstrating to employers that it is possible to motivate, be effective and achieve positive levels of output from a workforce based in their homes.
There will always be those who suffer when working in isolation, and those that require the structure of someone physically overseeing their work to get the best out of them, so it is likely the scales will somewhat rebalance on office based working, once Coronavirus is finally at bay.
Nonetheless, with these shifts in commercial property trends coming thick and fast – where can investors grasp opportunity?
The future of commercial property investment?
Savills has highlighted that changes in the industrial and logistics sector is taking the commercial property sector by storm, with a requirement for warehousing rising through the ranks exponentially.
Amazon alone has increased its warehouse space by 1700% over the past ten years, according to Savills and warehouse occupancy rates have enjoyed a 180 degree turn in fortunes with vacancy rates at just 6.2% and as low as 2.4% in some London and South East locations.
The Amazon-effect is sweeping the retail space and is creeping into all aspects of shopping.
Big supermarket brands were amongst the first, Tesco and Asda carving a path for themselves. Others have had to follow suit, to compete with the low-price interlopers of Aldi and Lidl. Morrisons, Sainsburies have also embraced online grocery shopping and Ocado was set up specically and only as an online grocery outlet.
It is not just supermarket shopping that is embracing the shift. Wayfair, the furniture and homewares brand is increasing its warehousing square footage, as is fashion retailer ASOS.
Department stores John Lewis and Marks and Spencer must fight to ensure they do not land in the same waters as Debenhams – each have said they will be investing millions in supply chain – as has Next and Ocado.
As with any significant trend of this type, there will be the rush to become established and compete under a new dynamic, and the dust will settle to present the new normal.
Monitoring and acting quickly to embrace and capitalise on the changing shape of the commercial property market –as it happens, or ahead of the curve wherever possible - will be key to deriving profitable income from it.
Online service to improve Right to Rent checks
A new online service designed to make it easier for landlords and letting agents to carry out immigration status checks, is set to be introduced this year.
The somewhat controversial Right to Rent scheme, which requires landlords and agents to check that potential tenants have the right to rent in UK, has led to landlords discriminating against people who seem ‘foreign’, a court ruled in 2019.
Many have long argued that the Right to Rent scheme, introduced in 2016, discriminates against foreign nationals, especially for those that cannot easily prove their right to remain in the UK.
The scheme was introduced as part of Theresa May’s ”hostile environment” agenda, which has proven unpopular with landlord association groups, letting agents and tenants, and housing charities.
To prevent tenant discrimination, the Home Office plans to make it compulsory for landlords to check tenants’ immigration status, using the new online service.
In a statement to the House of Commons, Parliamentary Secretary Chris Philip claimed that the new online service, scheduled to be available in November 2020, will improve the current process for agents and landlords, as it will allow them to undertake checks more efficiently, in real time.
How the online service is expected to work
The service has been created to protect and safeguard prospective tenants, by allowing them to view their home office profile, before sharing it with landlords using a unique access code.
This means that landlords and agents will only be able to see an individual’s right to rent information, and not their personal information.
“We have worked closely with landlords and letting agents in designing the service, but we need to change Right to Rent legislation to enable them to rely on the new online service to discharge their legal responsibilities under the scheme.”
Landlords and agents are still able to carry out the existing document-based check.
The new online check will be a voluntary option, while migrants and landlords begin to get familiar with the new service and use becomes more widespread.
Prospective tenants will continue to be able to demonstrate their Right to Rent to landlords, by showing a valid passport or national ID card until the 30th June 2021, when the online service becomes compulsory.
Not practical for everyone
However, since the new online service was announced, Lords and MPs have been debating the practicality of the online status checking service.
Peers have encouraged the government to allow prospective tenants to physically prove their settled status, if they want to.
It is suggested that, having a digital-only service, could present barriers for some prospective renters. Language barriers, lack of IT knowledge and resources may be issues, which could prevent people from securing a rental property.
Member of The House of Lords, Lord Horam, pointed out that the Australian government transitioned to a digital system, but also allowed people to use a paper system - at no cost - for eight years.
Doubts that housebuilding target will be met
New build housing targets set by the government are called into doubt, as the Covid-19 pandemic presents a major challenge.
The pandemic and subsequent lockdown has had an impact at both ends of the construction pipeline. From small home renovations, to large-scale projects employing thousands of people.
Construction companies failing to develop enough homes will likely contribute to the ongoing affordability crisis, leading to overcrowding issues in some parts of the UK, particularly in England.
According to Nationwide’s annual house price index, residential property price growth hit a four-year high in September 2020, as a result of pent-up demand and the stamp duty holiday.
An unlikely target
To improve the housing market the Conservatives, in their election manifesto last year, committed to increasing housebuilding levels by delivering 300,000 new build homes a year, by the mid 2020’s.
However, recent data conducted by the Ministry of Housing, Communities & Local Government shows that building work started on 15,930 dwellings in three months from the beginning of April to the end of June, compared to 33,188 between January and the end of March, when Covid-19 restrictions were implemented.
To put it into perspective, the research made a comparison to old data, revealing that housing starts are 67% below the Q1 2007 peak and 7% below the previous trough in Q1 in 2009.
Only 15,950 homes were completed in the second quarter of 2020, down from 41,974 in the first quarter.
Clive Docwra, managing director of construction consultancy McBain, discussed the ¬¬¬¬present situation, explaining:
“The industry is now facing a double-whammy – trying to recover from the impact of Covid but also suffering from the uncertainty over a Brexit deal – with investors holding off putting money into new developments until the picture on a withdrawal agreement becomes clearer.
“The government will no doubt point to its recent planning White Paper as the answer to building more homes, saying that it will mean ‘permission in principle’ will be given to developments on land designated for renewal to speed-up building.
“But the uncertainty and resulting fluctuating values driven by Covid and Brexit are reducing the incentive on developers to build in the short term.
“The government could address this by temporarily staggering or deferring Section 106 planning obligations – where developers are asked to provide contributions for community infrastructure – so that developers are encouraged to complete housebuilding projects as soon as possible.”
MHA, an accountancy association conducted further research, to understand the impact of the Covid-19 pandemic, within the construction sector.
They surveyed 100 firms in the sector, and found that almost half of the firms felt that the impact of Covid-19 was substantial, while 44% believed that it had a minimal impact.
Only 5% of firms stated that the damage was critical.
When asked about the future, almost a third of firms confirmed that business activity is back to a normal level, or almost back to normal. Whilst 30% said that, it will take over a year to return to pre-pandemic levels.
There’s no doubt that the Covid-19 pandemic has had a massive impact on the housing industry, and although the housing market is showing signs of recovery, the future is still uncertain, especially as there have been several warnings of a second lockdown heading into autumn.
Housebuilding impact on landlords
The falling-short of housebuilding targets is a story we have seen time and again, irrespective of the political party at the helm of government.
As a result, the Private Rental Sector will inevitably be called upon to pick up the pieces, in terms of housing the large section of the population, for whom home ownership is rendered completely out of reach.
The question is, will this generate a dynamic where political parties will be forced to acknowledge the value of the sector and start making life easier for UK landlords?
This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.