The COVID-19 pandemic has caused clear and significant damage to the financial health of millions of individuals, as well as the world as a collective, but which group has been left the most vulnerable? Read our latest blog to find out the financial implications for tenants, buy-to-let borrowers and residential mortgage borrowers, as well as what Smartr365 would like to see implemented to help the financial recovery of these various groups.

 

Tenants

Tenants have been well-protected under new government initiatives, such as the introduction of rent payment holidays which allow individuals to delay payments if they are suffering financial hardship as a result of the pandemic. The government have also revised eviction rules, meaning that tenants now legally require six months’ notice before any repossession proceedings can begin. The continuation of the tenancy deposit scheme (TDP), which has protected all deposits relating to shorthold tenancies that began after 6th April 2007, has also provided some much-welcomed confidence for financially vulnerable renters. Therefore, the government protection of tenants is well-documented and gratefully received by the property market.

 

Buy-to-let borrowers

However, many have criticised the government’s protection of buy-to-let mortgage holders over recent months. While the revised eviction notice and availability of rent payment holidays provide a fantastic safety net for financially vulnerable tenants, they have had the opposite effect for landlords. Although payment holidays are also available to landlords, this does not prevent interest on the landlord’s mortgage from growing. The increased interest can impact the financial standing of the landlord in the long-term, as they face extended repayments with no certain stream of income.

Conor Murphy, the founder and CEO of Smartr365, has also publicly stated that ‘In providing its support for tenants who have found themselves vulnerable through the pandemic, the government has inadvertently increased the risks to buy-to-let mortgage borrowers’, in a comment to the FTAdviser. This could certainly be an area of the market that the government look to provide further support for in the coming months.

 

Residential homeowners

As with the support for tenants, the government support for residential homeowners and borrowers has been extensive and well-documented, with the Coronavirus Job Retention or ‘furlough’ scheme and the increased availability of mortgage payment holidays being welcomed by individual borrowers. However, borrowers are also urged to consult an experienced broker in order to develop a bespoke payment plan and understand the potential impact of mortgage payment holidays on future lending decisions.

 

What would Smartr365 like to see in 2021 to help various types of borrowers and the overall recovery of the market?

Smartr365 has welcomed the various government initiatives introduced over the past year to support various aspects of the property market and would encourage even further support for landlords. The recent reintroduction of 90% LTV mortgages by various lenders to borrowers has also been a widely celebrated sign of market resilience which Smartr365 would like to see continued throughout 2021. As always, experienced brokers and the latest mortgage technology will be key to helping borrowers find the optimum deals and should be every borrower’s first step when navigating the mortgage market.