Why landlord loans need to be extended
Last month the Scottish Government passed temporary legislation to extend private sector rental notice periods for most eviction grounds to six months. It is right and essential that tenancies are supported given the pressure on incomes and jobs from COVID-19. But as rent arrears increase, we need to ensure all landlords are given the right support so that our housing system is not inadvertently allowed to implode.
Recognising the pressure on the private rented sector the Scottish Government announced a loan scheme to provide support for private landlords which will cover 100% of the rental income from one property.
While some may contend that private landlords should not get any help at all, they are a critical component of the housing system in Scotland. We need all parts functioning effectively if we are to rebuild our economy and provide the mixed range of housing we will need in the future.
Ask yourself this: with an uncertain job market and probable economic hardship, isn’t it likely that many people will want to be as flexible as possible and prefer to rent rather than make the long-term and expensive decision to buy a property, when they don’t know what the future holds?
Social housing should, can and will meet some of that need but we remain in the midst of a social housing crisis. There are not enough social homes. We must therefore ensure private landlords can continue to offer homes for long-term let giving tenants the choices they will be looking for.
The Scottish Government’s proposal is a welcome first step but we still run a serious risk of collapse in Scotland’s overall sector unless more is done.
If the objective is to ensure landlords can still offer homes for private rent in the future, then limiting this to just one property, in all circumstances, inhibits the chances of success for the scheme. A small-scale landlord operates the same way as other SMEs, some of which may be entitled to government support for each of their separate outlets. We would ask for a similar position for landlords, even if this was on a sliding scale for additional properties and where the impact of rent arrears can be evidenced.
We understand there will be strict eligibility criteria applied to the loans. The facility will only be available to individual landlords, we presume to prevent larger businesses who do not need support profiting from the scheme. While we agree with that sentiment, if we don’t support the entire sector, we run the risk of large-scale collapse and tenants being left without homes.
In order to prevent abuse, we suggest requiring landlords with more than one property to declare their business does not qualify for any of the other Coronavirus support available such as the job retention scheme, business grants, business rates holiday or self-employed support. This would quickly and easily achieve the same goal but ensure landlords who need support do not slip through the cracks.
But the reality is the longer this goes on, the less likely that loans will be enough. Any one of us would be cautious of taking on additional debt without knowing when we will be able to repay. Such debt worries will make landlords less likely to use this support, leading instead to them selling up and exiting the sector, reducing housing supply at a time when it is most needed. If this proves to be the case then the government will have to consider different kinds of support.
We are all impacted by the pandemic, so the housing sector, alongside the government, needs to think past tenure concerns when it comes to safeguarding our housing system and people’s homes. Councils, housing associations and private landlords are all facing income pressures so we need support from government to recognise the importance that we all play in providing safe and secure housing.
We all have a responsibility to our tenants. Our organisations do not exist without our tenants. The last thing we want to see is a surge in evictions at the end of the Coronavirus outbreak right at the time people will be trying to regroup and stabilise their lives. Collectively the housing sector needs an approach that protects all parts of housing in Scotland to guarantee that we can provide the different types of quality housing we need.
This piece was written by Callum Chomczuk, national director of CIH Scotland and John Blackwood, chief executive of the Scottish Association of Landlords