A new loan scheme has recently been launched in Wales to assist tenants who have been most affected by the Corona Virus. The Scheme is aimed at people in the Private Rental sector who have slipped into rent arrears or who are likely to slip into rent arrears due to the Corona Virus.
The loan can be used to pay off rent arrears or to pay for future rent payments if a tenant reasonably feels they will struggle to pay their rent in the future because of the Covid-19 pandemic.
Eligibility
Anyone in the private rental sector in Wales who has rent arrears dated from the 1st of March 2020 onwards or who feels that they will struggle to pay future rent because of an income reduction directly caused by the impacts of the Corona Virus will be eligible to apply for the loan. It is important to note that this loan will not be given for any rent arrears prior to March the 1st 2020. The NRLA, however, advises that if a tenant is already on benefits, they apply to their local authority for Discretionary Housing Payments rather than applying for the loan. It is anticipated that a tenant will only be able to apply once for a loan.
Borrowing Limits
There will be no limit to the amount that can be borrowed as long as they tenant can show that they can afford to repay the loan so there will be an affordability check, although the exact details of this have not been released yet.
Payment of the loan
The loan will be paid directly to the landlord or the letting agent responsible for the property. The tenant will not see any of the money. It is important to note that, although the money will be given directly to the landlord, the debt will remain with the tenant and the landlord has no obligation to repay any of the loan at any time. As the Landlord will receive the money to cover any rent arrears they will not be able to evict a tenant for serious rent arrears.
Repayments
Repayments will be allowed over a period of 5 years and will attract an interest rate of 1% APR. Anyone applying for the loan will have to convince the lender that they can afford the repayments in the future.
Who runs the scheme?
The scheme will be administered by the Welsh Council for Voluntary action and the funds themselves will be made available by various accredited credit unions. The details of this have not yet been made clear and further updates are expected closer to the time of implementation.
Timings
The scheme was announced during August and is due to come into effect sometime in September, but no firm date has yet been set. Tenants are advised to keep an eye on announcements by the Welsh Government regarding the loan scheme
The tenant saver loan scheme in Wales in designed to help those in the private rental sector pay their rent arrears off or pay future rental payments if they anticipate financial trouble. Although the loan does need to be paid back and there is a small interest payment, it should allow tenants some breathing space to get their finances back to where they need to be and will also give them some security from eviction.
Northwood is very much behind the campaign by the National Residential Landlords Association (NRLA) to introduce a similar scheme in England, read more here.
