Providing financial support, this loan scheme is designed to help those in the private rented sector who are experiencing rent arrears since 1 March 2020, or in danger of getting into rent arrears, as a direct result of COVID-19. There is no cap set on the amount a tenant can borrow.
The Welsh Government is still finalising the details, but ARLA Propertymark understands that the scheme will work by the tenant applying for the loan with support from the landlord. Applicants will be required to provide evidence that they can afford the scheme and have the ability to re-pay. Once approved, the funds are transferred directly to either the landlord or letting agent. There is no limit on what a tenant can borrow, providing the loan repayments are affordable and will be charged at an interest rate of 1 per cent APR paid over a period of up to five years.
The scheme will be administered by Wales Council for Voluntary Action (WCVA) and delivered through credit unions who will conduct checks to audit applications, using, for example, tenancy agreements and personal identification.
Whilst tenants cannot be forced to apply for the support, the Welsh Government expects one-off applications to be made subject to later developments concerning the spread of the virus, the impact on employment, and the existing furlough scheme.
A press release from the Welsh Government says that the new Tenant Saver Loan Scheme will provide an affordable way to cover rent arrears, or future months’ rent, reducing the risk of eviction and homelessness. These loans will be paid directly to landlords and are available for tenants who were not in significant rent arrears prior to 1 March this year. Paying the monies directly to the agent or landlord will provide assurance that rent arrears will be covered, and will remove the threat of eviction for rent arrears.