At the end of October when the furlough scheme ends, more people will find themselves out of work. The latest ONS statistics estimate that between March and August 2020, the number of people on payrolls had fallen by 695,000.

Industries such as hospitality and retail have been hit hard by the Covid-19 lockdown and many people who work in these areas live in the private rented sector.

As furlough comes to an end on 31 October, it is likely we will see disproportionately more people in private renting unable to pay some or all of their rent.

Recent BSA research* found that for homeowners with a mortgage, 92% were confident they could meet their regular repayments over the coming six months, and just 6% were not confident. But the picture is different for tenants with 75% saying they were confident and 19% were not confident they could meet their regular payments.

This tallies with Shelter’s findings where 19% (1.6 million) of adult private renters are constantly struggling with their rent or have fallen behind. The English Housing Survey from MHCLG states that 73% of private rented households with dependent children have no savings.

So if the rent it not being paid, there could well be a knock-on effect on landlords’ ability to make mortgage payments. Around a third of properties in the private rented sector are owned by landlords with buy-to-let mortgages.

The buy-to-let figures among building societies show that of those landlords who took a three-month payment holiday, 85% have returned to full payment. The option to extend the mortgage holiday for a further three months was taken by 14% of landlords and 0.5% have missed payments.

Evictions and repossessions

The government’s ban on tenant evictions came to an end last month but new legislation means landlords must now give six months’ notice of eviction, instead of three months. There are exceptions, including cases of serious anti-social behaviour or domestic abuse, or where no rent has been paid for more than a year leaving landlords with debts.

In addition, the ban on mortgaged properties being repossessed is due to be lifted on 31 October. Repossession procedures for homeowners that were going through the courts pre-Covid-19 were all cancelled, so they will need to be reactivated by lenders. This is likely to take six months, so the timing will create a perfect storm in April 2021 – the courts will have a backlog of property repossession and tenant eviction hearings to deal with.

The government needs to re-evaluate the safety net for tenants and it should be reviewed now so there is a plan in place when this storm sweeps in. The health crisis has led to a financial crisis and as unemployment increases the government must decide where its priorities lie. Keeping people in their homes is both an economic and, more importantly, a societal priority.

Robin Fieth is CEO of the Building Societies Association 

*BSA Property Tracker survey conducted by YouGov. Total sample size was 2,091 adults. The survey was conducted online between 28 Aug and 1 Sept 2020. The figures have been weighted and are representative of all GB adults (aged 18+). The figures exclude people who did not pay a mortgage or rent or who selected “Prefer not to say”.