Demand for Rental Sector Surges While Repossession Looms for Some Landlords
Recent rental data shows that demand for rental homes surged in July, rising to the highest levels on record, while the number of properties available to let also rose sharply. The figures show that the UK's lettings market remains broadly healthy despite the difficulties over the past six months during the coronavirus pandemic.
However, it’s not all good news as a leading property lawyer warns that many Buy-To-Let (BTL) landlords could face repossession orders from their lenders amid the extended eviction ban. With an extended period of no rental income, but the possibility that any mortgage payment holiday will soon come to an end, some landlords will be in a tough position.
This combination of developments highlights the difficulties across the entire economy; some parts are performing strongly as the UK re-opens for business, while others continue to struggle to recover.
Lettings Demand Continues to Rise
According to the latest survey from ARLA Propertymark, demand for rental homes across the UK rose again in July from an average of 79 tenants per branch in June. With 97 prospective tenants registering per letting agent branch, the survey recorded a new record high number of interested renters, surpassing the previous high of 88 in January 2020.
Meanwhile, the level of stock for those new renters also rose, to another new record, of 208 properties per branch in July, up from 200 in June – both months were above the former record high of 192 properties per lettings agency branch achieved in July 2017.
The data highlights that while there are still many concerns about the strength of the economy and the difficulties some tenants and landlords are experiencing with regards to rent payment holidays, after being locked down for months, that pent up demand for rental homes is continuing to be exercised as we enter the autumn months.
“We have seen a record-breaking level of rental stock, and demand from tenants continues to grow, providing a positive outlook for the future of the private rented sector,” said Phil Keddie, ARLA Propertymark’s president. “ For the market to fully recover from the Covid-19 pandemic, it is vital that landlords have good communication with their tenants, and that they continue to keep paying their rents, especially in light of rule changes and announcements impacting notice periods and additional government financial support being offered to tenants and landlords.”
However, it’s not good news for all tenants and landlords.
Repossessions loom amid eviction ban extension
While many landlords have suffered minimal or even no ill effects from the pandemic, others are continuing to struggle through a difficult period where their tenants are unable to pay rent but also, cannot be evicted.
UK property lawyer, Mary Rouse, from Midlands law firm Wright Hassall, has warned that for some BTL landlords, the extension of the eviction ban could mean they struggle to avoid a repossession order. That’s because, after months of mortgage repayment holidays, some lenders are beginning to expect mortgage repayments as those payment holidays come to an end.
“We need legislation that treats both landlords and tenants fairly and, at the moment, this simply is not the case,” Rouse said. “The way forward is a very clear amendment which enables landlords to progress cases where a tenancy breach is non-Covid related, for instance antisocial behaviour, domestic violence, or where substantial arrears had accrued before Covid began,” Rouse added.
The experienced property lawyer raises the point that while pandemic-related problems should still court support, with much of society able to function more ‘normally’ now, other tenant-related problems that warrant eviction action should be permitted to go ahead. However, its likely that, due to the number of business who have shut down or still operating at below capacity, many tenants are genuine victims of the effects of the coronavirus.
Of course, while it’s clear the government can’t continually extend the no-eviction ban, it’s equally clear that the answer to this issue is far from straight forward. There is hope the government will find a more acceptable solution to the problem, but how long that will take remains unknown. In the mean-time, the UK’s lettings market will continue to be affected by the pandemic, with highs and lows experienced across the country.
