Aid for select few private rental landlords

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The Scottish Government has published details of its promised interest-free loan for private landlords.

The Private Rent Sector Landlord COVID-19 Loan Scheme, a £5 million fund, will offer eligible landlords up to 100% of lost rental income for a single property if their tenants are having difficulty paying rent during the coronavirus (COVID-19) crisis.

However, the criteria for this loan scheme mean many landlords will be ineligible. In order to be eligible for a loan private sector landlords must:

  • let properties as individuals not through a business
  • have five or less properties to rent
  • have lost rental income due to tenants unable to pay rent as a result of the COVID-19 pandemic

We are pleased that the Scottish Government has made a move to help the private rented sector. However, we feel this loan is too narrow and ignores the vital contribution of many landlords who rent their property as part of their business. This practice is particularly common in rural areas where a significant proportion of housing is provided by rural businesses.

We would ask the Scottish Government to reconsider the criteria they have for this loan and allow landlords who own multiple properties and let their properties as part of a diversified business access to support if they need it.

Many rural landlords live in the same community as their tenants and have relationships with them. They are aware of the difficulties many of their tenants are facing due to coronavirus and have given their tenants significant rent reductions or rent holidays. We feel that if a landlord is able to demonstrate they have lost a significant amount of rental income they should be eligible for support.

For those that are eligible for the loan, the Private Rent Sector Landlord (non-business) COVID-19 Loan Scheme opened for applications on 5 May. 

It is important to note that the loan scheme will only cover lost rental income for a single property although landlords will be able to indicate if they are losing rental income from more than one property.

Landlords can also apply for a loan where a rental property became vacant on or after 01 February 2020 and the landlord is unable to get a new tenant because of the restrictions currently in place.

Landlords will be able to apply for a loan to cover lost rental income for a period of up to 6 months, backdated to the 01 March 2020.

The loan is intended to provide an option where other forms of financial support are unavailable to the landlord. Where a landlord is eligible for other forms of support – for example the Coronavirus Self-Employment Income Support Scheme - then they would be expected to take these up rather than apply for this loan.

Landlords facing difficulties with repayments on a mortgage for a rental property are expected to seek a mortgage repayment holiday from their lender before they apply for a loan.

Applications must be made by the landlord personally. Letting agents may not apply on their behalf.

The application process requires landlords to confirm they understand the terms of the Coronavirus Act 2020 in relation to eviction proceedings, and that they have discussed rent issues with their tenant and reached agreement on managing arrears.