Many landlords have lowered rents

Savings and lending bank Shawbrook Bank reported that nearly half (46%) have lowered their tenant’s monthly rent payments as a direct result of the recent pandemic.
Shawbrook Bank conducted a study on 1,000 landlords. These included 150 portfolio landlords, those are landlords who own four or more properties. 1,000 private tenants were also studied on their property portfolio and rental situation.Whether they took a payment holiday or rent reduction during the pandemic, what they look for in a property and whether their property plans have changed following Covid-19 was analysed.

In total, 28 per cent of landlords gave their tenants a full rent payment holiday – a period of up to three months where tenants were not liable to pay any rent.Additionally, 18 per cent offered a rent reduction; a period where tenants paid a lower level of rent as agreed with their landlord.

On average, rental payment holidays lasted for three months, compared to rent reductions which lasted four months.Those landlords that gave their tenants a payment holiday estimate they lost £7,500 on average, in comparison rent holidays cost landlords £6,500 on average.

When asked about how the agreement had come about, more than a third of landlords who gave a form of rent reduction said that they proactively offered it to their tenant, while a further 45 per cent said it was a mutual decision.

Concerns around furlough, job security and redundancy were all common reasons why a rent reduction or payment holiday were suggested.

Impact of payment holidays and rent reduction on the industry

Payment holidays are offered by some loans and mortgages. As long as this is agreed within advance they allow people to miss the occasional monthly payment. Throughout the Covid-19 crisis, payment holidays have been relied on heavily as an economic support measure.

John Eastgate, managing director of property finance at Shawbrook Bank, comments: No amount of foresight could have prepared landlords, or tenants, for the impact of the pandemic.”

“During this incredibly difficult period, landlords acted pragmatically, recognising the additional strain their tenants were under. In fact, in many cases, landlords were initiating the conversation around cutting rents to ease their financial burden.”

Landlords estimate they suffered losses by offering payment holidays. Although these only last for three months on average, an estimated £7,500 on average was lost by landlords by offering payment holidays.



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