COVID-19 could cost BTL sector £14.9bn in three months
The coronavirus outbreak could cost the buy-to-let sector £14.9bn across the UK in three months, according to research conducted by deposit replacement scheme Ome.
This information is provided on the basis that tenants are unable to pay rent during the three-month support period announced by the government.
Research conducted by the firm shows that there are 5.2 million households currently within the private rented sector that are unable to work and pay their rent.
This could result in the buy-to-let sector noting a £4.97bn loss ever month, based on the average monthly rent of £955.
England would note the greatest loss, with an estimated £11.6bn under threat in rental income.
Regionally, London has the potential to record the highest losses, with a predicted £4.9bn over a three-month period.
For landlords in England, they could potentially be facing a £5,730 shortfall in rental income over the next three months.
This is based on the average landlord with a portfolio of two rental properties at £955 per month each.
In Scotland, the ratio is greater, with the average landlord owning 2.1 properties, this increases its potential losses up to £6,146, and Northern Irelands is predicted to be £6,083.
Matthew Hooker co-founder at Ome, said: “It’s great news that the government are providing some financial respite for the nation’s landlords, however, it’s more of a weekend away than a holiday and once expired, UK landlords are still facing the cost of a buy to let mortgage without the rental income to pay it.
“It’s by no means the fault of the tenant if they are unable to pay but there is a very real chance that landlords will turn to the rental deposits at the end of a tenancy in order to recoup this lost rent.
“While this would be unfair on a tenant who has otherwise kept the property in good order, it may well be the case that landlords are simply left with no choice.
The silver lining at least is that hopefully, not all tenants will be unable to pay their rent and so this sum of lost rental income should reduce, but whichever way you look at it, the UK rental sector is in for a tough few months.”