As an emergency measure across the UK in response to the coronavirus pandemic, the government temporarily banned bailiff-enforced evictions and eviction notice periods were extended from two months to six months. This ban put in place in March 2020 was intended as a short-term measure and in England has now come to an end. It has been extended several times to help tenants who have fallen into arrears with their rent payments during the pandemic.

Scotland

The eviction ban in Scotland has been extended until 30 September 2021 for areas that fall under level 3 or level 4 coronavirus restrictions. The situation is subject to review every three weeks. For areas in level 0, 1 or 2, evictions can be enforced. As a tenant, your landlord is required to give you six months’ notice, or 28 days’ notice if there has been a breach of the tenancy agreement. If your landlord has decided to move in to the property themselves, the notice period is only three months. In December 2020, the Scottish Government introduced the Tenant Hardship Loan Fund. If your employment or your ability to pay or rent has been affected by the pandemic and you are unable to pay your rent, you could be eligible for an interest-free loan. The amount of the loan will cover a maximum of nine months’ worth of rent arrears and is subject to an affordability assessment. The repayments will be deferred for six months and can be repaid over a five-year period.

The last 15 months have been extremely challenging for tenants and landlords alike. Landlords have experienced problems with properties featuring cladding, people leaving cities, and university accommodation no longer being required, as well as falling rental yields in some areas. Meanwhile, tenants have struggled with falling incomes and increased living costs. According to the recent Building Financial Resilience Report - around 20% of British households now live in privately rented housing and ONS data shows that these tenants spend around 33% on rent. Affordability has been challenging – increasing the risk of rental arrears. Vulnerability among renters may continue over the next couple of years as a knock on effect from the pandemic, so for landlords who want to protect and support their tenants during difficult times, and ultimately protect their investment, it's important to consider making your tenants aware of the financial protection available to them.

Financial protection

As a landlord, it’s important that your tenants have some financial protection in place so that your assets are protected if they are unable to work due to illness or injury. Income Protection insurance doesn’t cover unemployment but will cover accidents and long-term illnesses and can pay out until retirement age. It is therefore wise to make your tenants aware of the protection available and even introduce your tenants to a trusted and respected financial advisor who can outline the policies available and the associated costs. Although not all tenants will take out a policy, some will. In fact, Rental Income Protection Research carried out by Savanta for Legal & General found that 20-30% would take out a policy if introduced this way.

Available products

According to a recent report by Hymans Robertson, which highlights the hidden dangers of ‘generation rent’, is estimated that fewer than 10% of tenants have insurance that would cover their rent if they were unable to work due to illness. This is compared to 42% of homeowners, putting renters at considerably more financial risk than homeowners. Therefore, people who rent have an even more pressing need to protect their incomes. The majority of renters have admitted that they would have to rely on savings, benefits or their partner’s or parent’s income should they find themselves unable to earn due to illness. Many renters are unaware that the same kinds of protection used by mortgage holders are also available to those who rent. Income protection and/or critical illness insurance can cover a period of lost earnings due to ill health, whereas life insurance is ideal for families. The monthly cost of renting is often higher than mortgage repayments, but they will require the same basic financial protection. This type of insurance is more affordable than many people seem to think. The Hymans Robertson report asked renters what they would be willing to pay for a certain level of protection, and nearly 40% were willing to pay up to £20 a month. This would be more than adequate for a good level of cover. The good news is that insurance providers are starting to catch up with the growing demand, with policies designed to suit the specific needs of renters. This is certainly something that we believe landlords should consider.