Eviction ban extension could face tenants with over a year of rent arrears payments
Tenants across the UK could be facing months of rent arrear payments as a result of the current pandemic, with the average tenant expected to take as long as seven months to repay just three months rent, climbing to 14 for the worst hit, according to research conducted by deposit replacement scheme Ome.
Currently, tenants unable to pay their rent are safe from eviction, with the Government just announcing a two-month extension to the non-eviction period. To balance the books, the Government has also implemented a buy-to-let mortgage holiday for landlords struggling as a result, recently extending this to six months for those in need.
However, tenants still need to fulfil their rental obligations and those unable to pay at present could be facing lengthy backlogs of rental arrears payments.
For the average UK tenant unable to pay their rental outgoings, three months of non-payments would accumulate £2,877 in rental arrears, climbing to £5,754 over six months. With an average net monthly income of £2,039, it would take two months (1.4 months) to pay back three months rent and three (2.8 months) to pay back six months of rental arrears.
However, many tenants will still have financial obligations going forward and so a repayment based on total income is unrealistic. Ome looked at the time frame to repay these rental arrears based on a repayment of 20% of net income per month and found that it would take the average tenant just over seven months to repay three months of rental arrears, climbing to just over 14 months for those owing six months money.
In London, even with a higher net income, the high cost of renting would see the capital’s tenants take 10 months to repay three months of outstanding rent, climbing to 19 months for a six-month rental repayment.
The shortest time frame would be in the North East, although it would still take five months to repay three months of arrears and nine months for a six month repayment.
On a city level, tenants in Oxford would be the worst hit of all, with high rents and a lower salary requiring 12 months of rental repayments to cover three months of outstanding rent and nearly two years (23.3 months) to repay six months of arrears.
You May Also Enjoy
Buying a Home? What you need to know about asbestos
Hodge Bank introduces 80% LTV on Interest Only Mortgages, helping borrowers maximise their affordability
The end of the ‘Forever Home’? 63 per cent of young homeowners prioritise flexibility and renovation potential over permanence
Ignoring these simple winter property maintenance tasks could cost you big time
Half of first-time buyers delaying until after the Budget