Landlords in Scotland are now able to apply for an interest-free loan to cover lost rental income during the coronavirus pandemic.
The move has put pressure on the rest of the UK to implement similar measures that would help tenants struggling to pay rent and in turn support landlords so they can still pay their mortgage or recoup lost income.
The Scottish Government’s £5m Private Rent Sector Landlord COVID-19 Loan Scheme opened for landlords yesterday.
It is only available to landlords registered before February 2020 who are not classified as a business and have fewer than five properties for rent in Scotland.
Applicants are expected to try to come to payment arrangements with tenants first and to have tried applying for a mortgage deferral.
Landlords can apply for a loan to cover lost rental income for a period of up to six months, backdated to March 1st 2020.
An initial payment of half of the agreed amount will be available and landlords will be asked to verify the continued loss of income before the second instalment is paid.
Loan repayments will be deferred until October 2020, with the loan being repaid in 12 monthly instalments.
The Scottish Government’s housing minister Kevin Stewart said: “We want to ensure no one loses their home during this unprecedented public health pandemic which is why we passed legislation to protect tenants against any eviction action for six months.
“This new £5m loan fund builds on that action and offers landlords the same security as tenants, ensuring they have financial support if tenants struggle to pay rent because of coronavirus.
“While all tenants should pay their rent if they can, we recognise the financial pressure people are facing. The Scottish Government encourages landlords to talk to their tenants about rent payment issues.
“We also expect landlords to be as flexible as possible with their tenants, discuss managing rental payments and help them find sources of financial support and advice.”
The move was backed by the Scottish Association of Landlords.
Its chief executive John Blackwood said: “We are pleased the Scottish Government has taken this first step in helping the private-rented sector weather the effects of the -pandemic, which recognises the role private landlords play in the housing system.
“Collectively the housing sector needs an approach that protects all parts of housing in Scotland to guarantee we can provide the different types of quality housing we need.
“We want to continue to work with the Government, as well as other public bodies, trade bodies and charities to ensure to achieve that and hope there will be further steps taken soon.”
South of the border, David Cox, chief executive of ARLA Propertymark, told EYE: “It is great to see that the Scottish Government has taken steps to help support landlords during this difficult time and we would welcome similar measures from the Government for the rest of the UK.
“Many landlords rely on rent as their only source of income, which is why we have been campaigning for people to keep the rent flowing during this time.”
Chris Norris, policy director for the National Residential Landlords Association, added: “We agree with the Government that where tenants are able, they should continue to pay their rent.
“Where tenants are struggling, most landlords are working with their tenants to help them.
“Where tenants are having to rely on benefits, these should be extended to cover the cost of rents in full.
“Where landlords who rely on rent for their income are struggling because of tenants being unable to pay all or part of their rent, they are unable to apply to any of the current Government business help schemes.
“The interest free loans for landlords available in Scotland would provide the support many landlords need to weather current difficulties.”
Comments (9)
Madness. I hope someone within ARLA propertymark is reading these comments! Surely LHA is there to cover the rent payments… unless the tenants are using this to supplement their income, instead of using it for what it is intended…
Got to remember the SNP i.e. the scottish government are an ultra left wing organisation….
What a joke!!! Why should the landlord defer mortgage payment in order to facilitate the tenant? and why should the landlord apply for a loan? It should be the tenant.
Government should just make sure the tenant is fully funded to pay the rent / housing – its that simple, so much confusion with all these stupid schemes.
They are trying to shaft landlord from every which way!!
The sad thing is, this situation is not going away soon. Just imagine those furloughed employees being converted to redundancies once the fuloughing period is over.
Tough times ahead!!!
David Cox what planet are you on!
The article misses out the main condition…you agree not to evict the tenant and arrange a repayment plan. Some of the tenants we are having difficulties with are those already in receipt of UC who have lost their cash in hand second incomes and so stop paying rent. They are then forced to claim discretionary crisis loans. This scheme is not helping Landlords treat landlords the same as cottage holiday let’s and treat in the short term as a business
isn’t there already something called universal credit for this. Onus should be on the tenant not the landlord.
Why should the landlord apply for an interest free loan, surely it should be the tenant? Then the responsibility lays with the tenant to pay it back, perhaps through taxes, like a student loan.
Couldn’t agree more. This is madness. The tenant should get the interest free loan. Why can’t the government just pay the rents then recoup from tenant. This is a really poor outcome for landlords. Nrla I hope you are not thinking of supporting this! The mortgage holiday was awful for landlords and caused massive problems. Now landlords are paying the debts of tenants. Government know from the courts landlords rarely get the arrears from tenants. It is nothing short of disgusting the lack of support for landlords despite taxing many to death with S24
Tenants on furlough should be able to make most if not all of their rent payments. Those tenants that have fallen through the funding cracks should have been offered interest free overdrafts or loans from their banks.
The first port of call for collection of rental debt should be the tenants.
From our own experience, where a tenant is suffering genuine hardship, landlords have been very generous, but some landlords just aren’t in a position to make allowances.