Many buy-to-let landlords are heavily exposed to young renters most at risk of losing their job, according to new research from flatfair and Rowan Asset Management.
With almost half of all renters in the UK aged between 16 to 34, there is widespread concern that many young people face falling into financial distress as a high proportion of those work in retail or the gig economy.
More than one in three 18 to 24-year-olds are earning less than before the outbreak, research by the Resolution Foundation recently found.
Two million renters told charity Shelter that losing their job will leave them unable to pay rent. Research from the housing charity also found one in five renters in England expect to lose their job in the next three months.
Buy-to-let landlords who rely on rental income for their livelihood may struggle to meet their own obligations if their tenants fall behind on the rent while housing associations may also find their tenants are falling behind on rents.
Franz Doerr, CEO and founder of flatfair, said: “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.
“This may, in turn, see many landlords struggling to meet their own obligations such as mortgage repayments.”
Official estimates suggest joblessness could surge to at least 10% due to the pandemic, a level not seen since the 1990s. It was 3.9% in March.
George Jackman, chief investment analyst at Rowan Asset Management, commented: “It’s clear that there is going to be a sharp, short-term impact on many young people’s income due to the economic distress caused by the virus.
“But 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.”
Number of workers by sector and age
ONS 2018 statistics | 16-24 | 25-34 | 35-44 | 45-54 | 55-64 | |
Total Workers | 3,627,670 | 7,180,960 | 6,797,294 | 7,375,813 | 5,022,122 | |
Total retail workers | Retail | |||||
2,805,740 | Number of Workers | 641,574 | 673,861 | 457,946 | 515,826 | 401,730 |
% of Total Sector Workers by age group | 22.9% | 24.0% | 16.3% | 18.4% | 14.3% | |
Total Hotel workers | Hotel & Other | |||||
246,838 | Number of Workers | 68,528 | 66,638 | 42,911 | 38,398 | 21,996 |
% of Total Sector Workers by age group | 27.8% | 27.0% | 17.4% | 15.6% | 8.9% | |
Total in restaurants | Restaurants | |||||
837,195 | Number of Workers | 343,380 | 202,107 | 134,473 | 99,382 | 50,520 |
% of Total Sector Workers by age group | 41.02% | 24.14% | 16.06% | 11.87% | 6.03% | |
Total in hairdressing | Hairdressing | |||||
284,581 | Number of Workers | 54,554 | 79,690 | 68,107 | 53,833 | 5,783 |
% of Total Sector Workers by age group | 19.17% | 28.00% | 23.93% | 18.92% | 2.03% | |
Total in | Sports and Fitness | |||||
332,731 | Number of Workers | 112,059 | 74,650 | 45,976 | 49,607 | 35,716 |
% of Total Workers by age grouip | 33.68% | 22.44% | 13.82% | 14.91% | 10.73% |
PRS Tenants by age and salary
16-24 | 25-34 | 35-44 | 45-54 | 55-64 | ||
ONS 2017 | % of PRS Tenants | 11.5% | 35.0% | 22.8% | 15.6% | 8.0% |
ONS 2020 | Pay | £16,250 | £24,450 | £29,050 | £29,050 | £26,250
|
