Wales Tenant Saver Loan scheme - a key step towards a support package
Introduction
In August 2020, the Welsh Government (WG) announced the introduction of a new Tenant Saver Loan Scheme to support those most affected by the coronavirus pandemic.
NRLA researchers Nick Clay and Calum Davies have used a recent tenant survey, sponsored during the summer months of 2020's lockdown by the NRLA, to assess the initiative.
About the scheme
Following NRLA campaigning, the Welsh Government announced in August 2020 the introduction of a low-interest, direct-to-landlord loan for tenants who had fallen into arrears as a result of the coronavirus.
The interest on these loans is 1% APR and tenants will have up to five years to repay the loan, which will be administered by the Welsh Council for Voluntary Action and delivered by credit unions. The scheme is expected to open for applications in either September or October 2020.
The NRLA has recently expressed concerns about the decision to temporarily extend notice periods in Wales to six months (excluding those that cite anti-social behaviour and domestic violence). The distortion to the legal process has been compounded by the stay on possession-related court proceedings which only ended on 20 September. The six-month notice periods will be in place until March 2021.
Research findings
The paper is a based on a survey of private sector tenants undertaken by Dynata during July and August 2020.
Along with publicly available data on rent levels, the authors examine what the likely size of the loan book of the intervention is, as well as who is likely to benefit from the scheme.
The authors conclude the cost of the scheme could run to £10m+ depending on take up and qualifying criteria.
The NRLA believe most loans under the scheme will seem small to many people, but crucial to both tenants and landlords trying to avoid the courts.
The analysis shows that the policy is progressive in that it helps tenants most in need. The authors also support many aspects of the scheme, such as the decision to exclude those who were in substantial arrears prior to lockdown. Also the decision to make these loans low interest with a long repayment period is also to be applauded.
The requirement for wider support
The scheme has been established in response to the evidence and insight provided by the NRLA. The Welsh Goverment now need to closely monitor the loan fund’s rollout to assess how many tenants are or aren't able secure a loan. It may also need additional funds depending on take up and the loan's eligibility criteria. If it responds appropriately, then the scheme should make a significant difference to many tenancies. The scheme will achieve its aim of avoiding court action in tenancies which prior to Covid-19 had been successful.
BUT not every tenancy is sustainable, and many are already beyond saving for reasons other than Covid-19. This must be recognised in the context of also allowing court proceedings to recommence as part of a package of measures of which this loan scheme is just one component.
Landlords should still retain the right to apply to the courts to claim possession of property in cases unrelated to Covid-19. Giving landlords this right will help continue to ensure the supply of homes in the private rented sector (PRS) at a time when they may be most needed.
An analysis of the Tenant Saver Loan initiative in Wales
