The government must not go it alone in fighting Covid-19. The private sector must be central to its battleplan.
So far, Amazon has been drafted in to deliver home testing kits, breweries and distilleries are helping to maintain a steady supply of hand sanitizer and teams of consultants are manning the phones for the test and trace service.
As the longer-term impacts become clearer over the coming months, collaboration will prove crucial in ensuring that Britain bounces back as quickly as possible.
The impact on renters
This will be especially critical in sectors that contain people most vulnerable to the pandemic’s impact. This is especially true of the rental market.
For example, a higher proportion of younger people both renting and working in at-risk job sectors – like retail – exposes landlords of all sizes to the risk of their tenants being unable to pay their rent and falling into rent arrears.
And more than one in three 18 to 24-year-olds is earning less than before the outbreak, research by the Resolution Foundation found earlier this year.
As more firms start to furlough staff and others cease trading due to the economic impact of the virus, swathes of young renters up and down the country will see their incomes plummet and may not be able to pay their rent. Rising rent arrears are likely to mount over the year as a consequence
And the more worrying aspect of this whole crisis is how this young cohort of workers will be able to find stable employment over the long-term, with sectors like retail looking set to change fundamentally. It’s really hard to see retail being able to employ 2.8 million again any time soon, and right now there aren’t any emerging industries in this country that will be able to step in and fill this gap.
That’s why innovative solutions need to be applied to the rental market – urgently.
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Pleasingly, last month, the Ministry of Housing, Communities and Local Government officially backed Resolve by flatfair as part of its guidance on issues around the end of evictions ban to both tenants and landlords impacted by Covid-19.
Resolve is a tool that allows landlords to propose rent arrears repayment plans for tenants who have fallen behind due to the economic impact of Covid-19. The Government’s recommendation of our tool not only demonstrates that the state understands it cannot interfere in the affairs of landlords and renters indefinitely, but also that it acknowledges that the private sector – and crucially innovative tech firms like ourselves – will play a significant supportive role in getting Britain’s residential market back on its feet.
While there are undoubtedly turbulent times ahead for both residential landlords and their tenants, many of the hard lessons learnt over the coming months must be taken on board.
We should grasp this moment as an opportunity to make long-needed reforms to the rental sector that makes it better for everyone – whether tenant, landlord or agent.
For example, today’s technology means there is no reason why a tenant should have to physically hand over a wad of cash to secure their tenancy. Banking technology such as Open Banking and other payment tech means there are viable alternatives that don’t involve locking away significant sums of cash.
Right now it is estimated there is over £5bn locked up as tenancy deposits. Imagine if we – using payment tech – freed up that money and out back into the hands of tenants?
That money would then effectively re-enter the economy – rather than being artificially taken out of circulation – and tenants could choose how they use it. That could mean spending it in a struggling local independent shop or saving this money to put down for a first-time deposit.
The key is offering choice.
Necessity is the mother of invention is an old truism, but an apt one for these times. Covid-19 has disrupted all our lives, but instead of being defeated by it, we must take it as an opportunity to rethink how we live. Technology, and the private sector working with the government to solve problems thrown up by the virus, must be a central pillar of our response.
Written by Franz Doerr, Founder and chief executive at payment technology platform, flatfair