Coronavirus outbreak could cost the buy to let sector £14.9bn in three short months

The latest research by Deposit Replacement Scheme, Ome, has found that the impact of the Coronavirus could cost buy to let landlords nearly £14.9bn should tenants be unable to pay rent during the three month support period announced by the government yesterday.

Last night the government announced that they would suspend new evictions and halt new possessions proceedings to the court while the Coronavirus crisis persists. They have also protected landlords as well as tenants with a three-month mortgage payment holiday on buy to let mortgages.

However, if tenants simply can’t pay, this holiday will do little to help landlords who will still have to pay once the three months is up, with or without the rental income from their tenants.

Ome’s research shows that there are 5.2m households currently within the private rental sector alone and without the ability to work and pay their rent, the buy to let sector could see a loss of £4.97bn every month based on the average monthly rent of £955 alone. Over three months this climbs to a huge £14.9bn.

Nationally, this lost income is highest in England with potentially £11.6bn lost in rental income, while London is home to the biggest sum regionally with a potential £4.9bn lost in three months alone.

What does this mean for the average landlord?

There are some 2.6m landlords operating within the UK buy to let sector meaning the average landlord has a portfolio of two rental properties. With an average rent of £955 and a loss of three months’ rental revenue across both properties, they could be facing an individual £5,730 shortfall in rental income.

With a ratio of 2.1 properties per landlord in Scotland, the loss is at its greatest at £6,146 over three months with Northern Ireland also high at £6,083.

Not only does this huge sum have implications on a sector that has already seen its financial return stretched by the government, but it could see tenants out of pocket even further should landlords look to keep their tenancy deposit to account for lost rental income.

Co-founder of Ome, Matthew Hooker, commented: 

“It’s great news that the government are providing some financial respite for the nation’s landlords, however, it’s more of a weekend away than a holiday and once expired, UK landlords are still facing the cost of a buy to let mortgage without the rental income to pay it.

It’s by no means the fault of the tenant if they are unable to pay but there is a very real chance that landlords will turn to the rental deposits at the end of a tenancy in order to recoup this lost rent. While this would be unfair on a tenant who has otherwise kept the property in good order, it may well be the case that landlords are simply left with no choice.

The silver lining at least is that hopefully, not all tenants will be unable to pay their rent and so this sum of lost rental income should reduce, but whichever way you look at it, the UK rental sector is in for a tough few months.”

 

Location
Private renters
Average rent
1 month B2L lost revenue
3 months B2L lost revenue
Number of landlords
Average number of B2L properties
Cost per landlord
England
4,552,000
£852
£3,878,304,000
£11,634,912,000
2,266,770
2.0
£5,753
Wales
176,000
£515
£90,675,200
£272,025,600
104,450
1.7
£4,828
Scotland
340,000
£748
£254,481,840
£763,445,520
158,505
2.1
£6,146
Northern Ireland
138,000
£627
£86,526,000
£259,578,000
64,995
2.1
£6,083
UK
5,206,000
£955
£4,971,730,000
£14,915,190,000
2,594,720
2.0
£5,748
Location
Private renters
Average rent (2019)
1 month B2L lost revenue
3 months B2L lost revenue
London
964,000
£1,697
£1,635,908,000
£4,907,724,000
South East
713,000
£998
£711,574,000
£2,134,722,000
South West
474,000
£816
£386,784,000
£1,160,352,000
East of England
437,000
£869
£379,753,000
£1,139,259,000
North West
571,000
£621
£354,591,000
£1,063,773,000
West Midlands
405,000
£662
£268,110,000
£804,330,000
Yorkshire and the Humber
427,000
£617
£263,459,000
£790,377,000
East Midlands
359,000
£628
£225,452,000
£676,356,000
North East
202,000
£533
£107,666,000
£322,998,000
Sources:
Number of private renters
England
Scotland
Wales
Northern Ireland
Average rent
UK
Individual nations and regions

Properganda PR

National and local media coverage for property businesses. Journo quotes delivered in minutes.

You May Also Enjoy

Breaking News

Barclays: Mortgage and rental spending grows as younger buyers turn attention to new builds

Mortgage and rental spending grows 2.0 per cent, but consumer confidence remains unchanged   Rent and mortgage spending grew slightly year-on-year in January, up from 1.8 per cent in December Consumers’ confidence in their ability to afford rent and mortgage payments remained unchanged month-on-month at 52 per cent Those who have recently remortgaged onto higher…
Read More
Marketing

How to Generate more Estate Agency Property Leads

There is said to be over 50,000 estate / letting / auction agents across the UK, a figure that has remained relatively steady over the last few years. With over 7,000 in London alone, the industry of selling and renting property is undoubtedly well serviced with no shortage of options for consumers to chose from.…
Read More
Breaking News

UK’s Housing Crisis Deepens as 1.4 Million Homes Sit Unbuilt

Cornerstone Tax reveals that 19% of tenants have been forced to move five times in less than five years due to landlords exiting the market David Hannah, Group Chairman of Cornerstone Tax, urges the government to focus on addressing the wider housing affordability crisis by incentivising landlords The government’s plan to develop 12 new towns…
Read More
Rightmove logo
Breaking News

Rightmove House Price Index: Price growth slows as stamp duty deadline looms, but activity remains robust

The average price of property coming to market for sale rises by 0.5% (+£1,805) this month to £367,994, a muted price rise for this time of year as new sellers lower price expectations, due to the looming stamp duty deadline and high competition: The number of available homes for sale is at a 10-year high,…
Read More
Marketing

Attracting the Right Buyers: Digital Strategies for Real Estate Agencies

Okay, let’s talk approximately how real property companies have promoted houses in recent times. It’s not as adored as it used to be! They cannot just place up a signal and expect human beings to be exposed. We stay in a virtual world, and that means they want to use smart online strategies to locate…
Read More
Breaking News

Rise in no fault evictions

No fault evictions have risen according to the latest data published by the Ministry of Justice. Property disputes lawyer says “some landlords are unwilling to wait for the new Renters’ Rights legislation and are choosing to leave the market” Landlords can apply for an accelerated possession order if the tenants have not left by the…
Read More