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Why do Scotland and Wales have loan schemes for tenants, but not England and Northern Ireland?

3-minute read

Mollie Millman

3 February 2021

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The coronavirus pandemic has left some tenants struggling to pay their rent as they battle unemployment or illness.

Governments in Scotland and Wales have introduced loan schemes to help tenants, but there are no similar schemes in England and Wales.

This means that many landlords are concerned about what will happen to their property investments and how they can ensure rental payments will continue.

Here we explore how you can keep the lines of communication open, as well as why there aren’t loan schemes for the whole of the UK.

What steps can landlords take to ease the situation?

The first step involves speaking to lenders about a mortgage payment holiday – you need to apply by 31 March.

As this is for mortgages, not rent, the option is currently only available to landlords – but it could be extended for a month beyond the end of March, in line with furlough support.

It’s also important to communicate with tenants and address any payment issues early on. Indeed, many landlords and tenants have worked together to navigate the issues that have emerged out of the pandemic.

You can check in with tenants about whether they’re experiencing any financial issues at a quarterly tenancy check, for example. Alternatively, a letting agent can approach tenants on your behalf.

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Remind tenants that loan schemes may be available

Landlords can also let tenants know about the loan schemes available in some parts of Britain.

These are currently available in Scotland and Wales, with industry experts calling for these to be replicated in Northern Ireland and England.

The schemes currently work on the basis that the tenant takes out a loan with generous lending criteria to ensure they can continue to pay their rent and stay in their homes.

The loan systems in place are the Tenancy Saver Loan scheme in Wales and the Tenant Hardship Loan Fund in Scotland.

In Wales, the Tenancy Saver Loan scheme is open until the end of March to tenants in rent arrears, and to those who may also struggle to pay future months’ rent due to coronavirus.

It’s paid directly to landlords or agents, and has an interest rate of only one per cent on loans. Tenants can repay over a period of up to five years.

In Scotland, the Tenant Hardship Loan Fund aims to help people who have had their finances or employment impacted by the pandemic and do not have other means of housing support.

The loans are available for up to a maximum of nine months’ rent costs, covering rent arrears and future rent, where those arrears have arisen since 1 January 2020. The loan is not available where a tenant had rent arrears before this date.

The loan can include up to a maximum of three months of future rent payments as part of the nine-month total.

Why aren’t there loan schemes in England and Northern Ireland?

Experts are calling for additional government support for tenants and landlords in England and Northern Ireland.

Oli Sherlock, of lettings experts Goodlord, said: “We must ensure that systems, potentially similar to those in Scotland and Wales, are in place so tenants stay on top of their rental payments and keep arrears low, or are supported to move to cheaper properties if needed.”

Mark Hayward, of Propertymark, said: "I see no reason why the loan schemes shouldn't be extended to England and Northern Ireland."

He suggested that the reason why they haven't could be to do with the average type of rental stock available in England and Northern Ireland.

Indeed, properties in those areas without a scheme tend to have higher average rents, which means that the schemes could cost more to run.

Mr Hayward said: “You would have thought that, with the Government’s focus on the rental sector, there would be a mechanism to assist tenants in those areas, particularly to calm the waters with the end of the furlough scheme.”

No figures have been published regarding the take-up of the schemes, but Mr Hayward said that anecdotal evidence suggested that they had been successful in keeping tenants in their homes.

That said, by not introducing the schemes in England and Northern Ireland, the government is suggesting that tenants should still pay their rent – a message that landlords will welcome.

Would you like to see more loan schemes for tenants announced? Let us know in the comments below.

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