As the COVID-19 pandemic continues to wreak havoc on the UK economy, another effect of the virus has been its impact on wealth equality. Though the nation as a whole has faced widespread job losses, shop closures and tight finances in recent months, housing market data reveal the pandemic has increasingly widened divisions between the wealthy and underprivileged.
The UK rental market, which remained mostly stagnant during the peak of the crisis, has slowly begun to recover. House prices to both buy and rent are increasing gradually, led by a boom in demand for rural and coastal locations as people reassess their lifestyles as a result of the pandemic. However, with this, the market has seen more homes being rented in wealthy areas and a sharp drop in rental activity in poorer localities.
Research by Hamptons International, a leading property firm, showed that in 10% of the wealthiest neighbourhoods, the number of homes let between May and September was up by 1.3% as compared to the previous year. New instructions also correspondingly increased by 4%. However, in neighbourhoods in the bottom 10%, a decrease of 14.8% in the number of homes being let was observed, with a decline of 17.7% in the number of instructions.
While these data reflect the overall reduction in the number of properties let as compared to the previous year, the impact seems to have been felt more strongly in less affluent neighbourhoods. As job redundancies rise and mortgage requirements become more prohibitive, people in underprivileged areas are less likely to be in a position to sign new rental contracts.
The head of Hamptons International, Aneisha Beveridge, stated, “Over the course of the pandemic tenants are more likely to have seen their incomes hit than homeowners. But the economic crisis has also widened divisions within the rental market. Tenants living in the least affluent areas of the country are most likely to have been impacted by the economic crisis and this has made it harder for some renters to move home – typically at a time when they need to prove their income and pass referencing checks.”
The change in attitudes of landlords has further exacerbated the degree of disparity in the UK rental market. Despite rising prices, landlords have become increasingly wary about subletting their properties in deprived areas given that renters may not have the means to pay for it.
According to the National Residential Landlords Association, over two-thirds of landlords expect their income to be negatively affected by the pandemic. Because of this, around 30% of them have planned to sell one or more of their properties over the next year, versus only 16% who plan on increasing the number of properties they own.
A possible solution to the widening crisis that has been proposed by the NRLA, among others, is for the government to provide hardship loans to tenants in order for them to cover rent arrears during the pandemic. While in the majority of cases, landlords have been understanding about their tenants struggling during the pandemic, it is unsustainable for them to continue taking on further arrears indefinitely.