Funding support can help cut rental evictions - David Alexander

One Covid-driven issue affecting the residential rental market south of the Border has been the number of last-minute decisions to extend the government’s temporary policy of banning evictions.

Now an influential group of MPs, the all-party Housing Communities and Local Government Committee, led by Labour MP Clive Betts says the government must establish a system of financial support for renters who have amassed significant rent arrears, and reveal it as soon as possible. Such a move would end the need to continue with the trend of last-minute extensions to the ban on evictions.

They claim the potential cost of such a policy – estimated to be between £200 million and £300m – would be less than the cost of the outlay required to deal with a large increase in homeless tenants (including health and welfare issues) that would ensue if evictions were to be reintroduced.

The committee is calling for Westminster to implement a scheme similar to the hardship loan fund initiated by the Scottish Government and which has recently received a boost in funding. This allows tenants who are in financial difficulties to apply for interest-free loans to help maintain their rental payments.

The Scottish Government has also extended its “no evictions” ban from the previous deadline of 31 March to 30 September, although the regulations will be subject to review every 21 days and therefore the ban may be lifted earlier than the latter date – either on a nationwide basis or perhaps on the basis of local authority boundaries.

“Serious anti-social behaviour” by tenants is not covered by the ban although in this context the word “serious” is open to wide interpretation, as many landlords and their agents faced with this problem have come to realise. Also, I would like to think that money from the hardship fund goes to those tenants who are genuinely in financial trouble not of their own making – and excludes the usual minority of chancers who, par for the course before the pandemic, believed they were entitled to live rent-free, whatever their circumstances.

Given that thousands of responsible, good-paying tenants have lost their jobs or seen their incomes drastically reduced through no fault of their own, the ban has been understandable. But in many cases it has not been necessary because an equal number of landlords have taken a realistic, common sense view of the unique nature of the situation and – showing a compassion which belies their (generally unwarranted) reputation for greed – have reduced rental charges and in some cases even offered a few months’ rental holiday.

Having said that, residential rental properties are businesses, not part of the charity sector. Landlords cannot continue indefinitely with reduced or zero income, especially those whose property is absolutely crucial to personal well-being, in some cases being the difference between whether they can or cannot afford to meet the mortgage commitments on their own homes (e.g. the individual who has chosen property over a conventional pension plan to fund his or her retirement).

Even when the ban on evictions is eventually lifted I am convinced many landlords will bend over backwards to try and avoid using the ultimate sanction to remove tenants unable to afford to pay rent. But, for the reasons stated above, it is a sanction they must have at their disposal.

Any longer-term extension of the ban will only make a bad situation worse. For starters it would likely lead to a huge increase in landlords selling up and their properties, almost inevitably, being taken up for owner-occupation. The result would be a reduction in the private rental stock which, I would contend, is the last thing Scotland will need as its economy begins to recover from the effects of covid.

David Alexander is Managing director of DJ Alexander