A leading referencing platform has warned that the lettings industry faces a major challenge when the extended furlough scheme ends on 31st March.
Last week Chancellor Rishi Sunak revealed that the scheme, which has so far supported some 9.6 million jobs since the first lockdown, has been extended by five months until the end of March.
“It’s clear the economic effects are much longer lasting for businesses than the duration of any restrictions, which is why we have decided to go further with our support,” said Sunak.
But having so many people on furlough for such a prolonged period is presenting problems for many letting agents as landlords reject or ask for guarantors for prospective tenants, if they have been furloughed.
“We’re clearly dealing with a new set of challenges when it comes to not only referencing but also the whole rental market,” says Simon Tillyer, Founder and Director of Vouch.
“With furlough extended, a major spike in unemployment predicted, and an ongoing stay on evictions, the landscape that agents and landlords are grappling with is an ever-shifting one.
“What we’re focusing on is ensuring our referencing product anticipates these challenges and works hard to flag evolving risk factors.
“We’re then offering additional support alongside this, such as Rent Protection Insurance and enhanced customer service offerings to further mitigate against uncertainty.”
Another referencing supplier which uses Open Banking protocols to check tenants, but which wants to remain anonymous, told The Negotiator that most systems provide reference providers with ‘average’ income levels for a tenant over usually a 12-month period. But this means it’s harder to spot when a tenant has been furloughed and their income drops by 20%.
“But the longer a person is on the scheme, the easier it will become to detect if a tenant has been furloughed,” a spokesperson says.
Hamptons International also says that problems with referencing mean it is getting increasingly hard for less affluent tenants to move home which, its research shows, is already beginning to show in the market with affluent areas seeing an increase in home moves, and poorer areas witnessing a drop.