Almost half (46%) of landlords* reduced monthly rent payments for their tenants because of the pandemic, according to upcoming research from Shawbrook Bank.
In total, 28% 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% 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% 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.
Portfolio landlords – those owning four or more properties - were more likely to have agreed a rent reduction with their tenants compared to single property landlords; some 17% of portfolio landlords admitted to missing out on income compared to just 12% of single property landlords.
The majority (59%) of landlords who gave rent reductions did this for more than one of their properties.
*Shawbrook Bank surveyed 1,000 landlords, including 150 portfolio landlords, and 1,000 private tenants on their property portfolio and rental situation respectively.
Shawbrook Bank’s research is part of a new report which will provide an overarching look at the Buy-to-Let market, as well as exploring the impact the pandemic has had on both landlords and their tenants and considering what this means for the private rental sector going forward.
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.
“This period has clearly underlined the critically important role that the private rental sector is playing, and will continue to play, in the UK housing market. Responsible landlords have shown their reliability during a crisis, understanding the changing needs of their tenants and acting quickly.
“Solid fundamentals will underpin the market going forward, landlords and investors should look to a positive future. There is a strong argument to suggest that landlords in regional locations have never been in a better position to profit, while city centres will continue to represent good value as workers head back to the office, even if it is on a part-time basis.”