The extension of the furlough scheme might be an indirect saviour for many lettings agencies says a leading PropTech entrepreneur.
Neil Cobbold, chief sales officer at automated payment service PayProp, says “The most significant headline announcement [in yesterday’s Budget] for the private rented sector in the short term – an extension of the furlough scheme until the end of September – will provide additional support for many tenants.
“The furlough extension will indirectly safeguard the finances of landlords and letting agencies by helping to keep rent arrears under control in the short term. However, when the furlough scheme does come to an end, there could be a significant number of redundancies which could put additional pressure on many tenants’ ability to pay rent.”
Furlough – formally called the Coronavirus Job Retention Scheme – has protected more than 11m jobs over the past 12 months and was scheduled to close at the end of next month.
Now however it will continue until the end of September on roughly the same basis for employees; however, employers will be expected to pay 10 per cent towards the hours their staff do not work in July, increasing to 20 per cent in August and September, as the economy reopens.
Cobbold says rumours that separate rent grants for tenants in England – similar to those introduced in Scotland and Wales – came to nothing and as a result he warns the end of furlough represents a cliff-edge in the autumn.
Cobbold also warns that although there was no announcement on Capital Gains Tax – a key issue for many investors in the private rental sector – that does not mean the tax will not change long term.
The government is expected to set out proposals to revamp CGT in a so-called ‘tax day’ on March 23, when a series of consultation documents will be released.
