Calls are being made for rents to be paid in full directly by the Government if a tenant is affected by the coronavirus.
It may be the only way to keep tenants in their homes amid the coronavirus outbreak, according to David Cox, of ARLA Propertymark.
He explained how tenants and landlords are facing ‘financial ruin’ amid the virus crisis.
Could rents be paid directly by the Government if a tenant is affected by the coronavirus?
The Government has already taken steps to protect tenants, including banning evictions and offering mortgage holidays to landlords.
But these may not be enough to prevent some tenants from losing the roof over their head.
Mr Cox told MailOnline Property: ‘Tenants face financial ruin amid mounting rent arrears and crippling debt if they fall through the gaps of the Government’s current provisions.
‘This is particularly the case for those who work in the gig economy or who are self-employed.
‘The knock-on effect of this is that landlords are not receiving their rent and are falling into financial ruin, which ripples out across the economy.’
Tenants are at risk of losing their home if they are unable to pay their rent – a risk heightened during the current crisis as tenants may have lost their job or fallen ill.
It means everyone in the property chain is affected if a tenant is unable to pay their rent, from the tenant to the landlord who may not be able to pay their mortgage if no rent is coming in.
Mr Cox explained that by stepping in early on, it means everyone in this chain can benefit.
‘For everyone’s sake, the Government needs to pay people’s rents if they are impacted by the coronavirus.
‘It is what the welfare state is there to do and the Government needs to do the right thing.’
How would it work?
It needs to work on a self-declaration basis, according to Mr Cox, where those who have lost their income – ether through falling ill or being laid off – apply for their rent to be paid via Universal Credit.
They would send evidence that they had lost their income to the Department of Work and Pensions, and their rent could be paid direct to their landlord.
Evidence could include a sick note issued by calling 111, a P45 or confirmation from their former employer that they had been laid off.
Could it encourage fraudulent claims?
In a word, yes. However, Mr Cox says it is time to act and to work on trust.
‘We need to trust people that they are making a legitimate claim. Now is the time to protect the 99 per cent of legitimate claims and deal with the 1 per cent of fraudsters later,’ he said.
‘If these measures are introduced immediately, then tenants don’t need to worry as they have the rent coming in and landlords are protected,’ he added.
Calls for such rents to be paid follows confusion about the Government’s announcement that it was banning evictions during the coronavirus outbreak.
There is confusion among some landlords and tenants about exactly what this means.
The ban does not stop a landlord from serving notices on a tenant such as Section 21 to seek possession of a property or Section 8 if a tenant has broken the terms of the tenancy.
This should not be confused with evictions, which is defined as forcibly removing a tenant from a property.
To evict a tenant, you need to start court proceedings, and these can only begin if the tenant refuses to surrender possession of a property at the end of a notice period.
As such, when the Government says it is banning evictions, it means that it is preventing the beginning of this court process.
It has achieved this by extending the notice period on Section 21 notices from two months to three months. It means no tenant can be forcibly evicted during this period.