Landlords and lenders marked the 25th anniversary of the Buy to Let (BTL) loan on 24 September 2021. Way back in 1996 the Association of Residential Lettings Agents persuaded a small clutch of lenders including NatWest and Paragon to proffer mortgages funded by rental income. At the time they were viewed with scepticism, but by 2015 they had formed 16% of all mortgage lending.
This notable landmark coincided with the sobering end of the emergency Covid measures that extended eviction notice periods in England. From 1 October 2021, notice periods for section 21 and section 8 return to two months and 14 days respectively for rent arrears. This particular landmark has been met with considerable relief by many landlords. 800,000 tenants are in arrears according to a Bank of England report and 82% of those didn’t have arrears before the pandemic hit in March 2020. The debt charity StepChange says that 200,000 of these have serious arrears and could be at risk of eviction. Indeed, Paul Shamplina, founder of Landlord Action told BBC Radio 4 this week that his instructions are up by 43%. “I’ve been working with landlords and letting agents for 30 years and I’ve never seen rent arrears as high as they are now.”
Eviction is always a last resort and we have seen considerable efforts made by landlords and tenants to negotiate arrangements during the pandemic.
NRLA research shows that 19% of landlords had not evicted tenants whilst extended notice periods were in force. But 11% say that they will begin eviction proceedings now that the pre-Covid notice periods have resumed. They will face a long wait to get their case through court according to Shamplina, who says there is a shortage of judges and bailiffs and that they should expect the eviction process to take 6-7 months. The NRLA continues to encourage landlords to talk to tenants and try to negotiate an arrangement or use a mediation service. Spare a thought for landlords with tenants in Wales where the notice period continues to be six months and in Northern Ireland it will be three months until May 2022.
There are reasons to be cheerful as we start to emerge from the worst of this crisis. Mortgage availability is good, with tighter criteria that lenders enforced during the Covid period beginning to fall away. Interest rates have hit an all-time low with typical 2-year 65% loan to value (LTV) BTL fixes priced at around 1.25%. It is extraordinary to think that the private rented sector has been operating within this low interest environment now for well over a decade. GDP figures for Q2 have also been revised up to 5.5%, showing that the UK continues to be the strongest recovering economy in the G7.