There has long been a rivalry between England and Wales (not just in the rugby), and Wales has taken the lead - in the property world at least - with a comprehensive loan scheme that could be the envy of English renters. While the English Government has extended the tenant eviction ban for another six weeks and is introducing the Debt Respite Scheme in May for temporary debt relief, it has not offered financial recompense to those struggling to pay rent due to COVID-19. Meanwhile, Westminster’s Cardiff counterparts have rolled out a low-interest Tenancy Saver Loan Scheme to help tenants whose rent has fallen into arrears.
The Welsh program, designed for private sector tenants, is available until March 31st 2021 and offers tenants a 1% APR interest loan that can be paid back over five years. The loan amount, which is based on a debtor’s ability to pay it back, allows tenants to borrow up to the maximum amount owed, although the conditions stipulate the reason the tenant can’t pay must be COVID-related, and the tenant cannot have been in significant rental arrears (over eight weeks owed) before 1 March 2020. It will be provided by seven Credit Unions across Wales.
The situation in England
In England, the situation is not looking as rosy. Citizens Advice calculates that more than 500,000 renters are in arrears, with the average amount owed being £730, which amounts to £380 million owed in total across the country. Their figures also suggest that 1 in 4 private renters have faced the possibility of eviction or cancellation of their tenancy agreement since COVID broke out. The National Residential Landlords Association (NRLA) places the figure at 800,000 renters in arrears, with the average owed being between £251 and £500.
The Government’s Debt Respite Scheme, also known as Breathing Space, comes into force in May. It gives those in debt, such as occupiers in arrears, the right to not be pursued by creditors for a temporary period of time. Two types of breathing space will be available: Standard Breathing Space for any individual, while Mental Health Breathing Space provides protection for individuals receiving mental health crisis treatment from an approved mental health professional.
👉 Our free eBook Regulatory Changes Affecting Landlords in 2021 discusses the Debt Respite Scheme.
Things are equally gloomy on the landlord side with England’s landlord help falling far short of what is being offered in Wales. While the Government has attempted to protect tenants by extending the eviction ban, changes to the notice period mean many landlords could now be facing a two-year wait to regain possession as a result, with no landlord support in the meantime.
Proposals for help
Several charities and organisations within the property sector have banded together to call for greater support and financial assistance for both tenants and landlords. A joint statement, backed by organisations including the National Residential Landlords Association (NRLA), ARLA Propertymark, the Nationwide Building Society, Shelter, and StepChange Debt Charity, calls for a package of measures to help renters pay off arrears built up since March last year when the initial lockdown started. It proposes interest-free, Government-guaranteed hardship loans for tenants to be paid directly to landlords in order to sustain tenancies (as has been introduced across the border) and income support for landlords through a series of grants to cover arrears in cases where tenants refuse or are unable to take up Government loans.
While the English Government is investigating further measures, currently, when it comes to landlord help, Wales is outscoring them.
For more information about eviction bans, the Debt Respite Scheme and other regulations affecting 2021, see our guide, Regulatory Changes Affecting Letting Agents and Landlords in 2021.