Renters across the country are being confronted with an economic struggle like nothing they have ever faced. While we welcome the government’s decisions to temporarily ban evictions and restore Local Housing Allowance (LHA) to cover the bottom third of rents, these just do not go far enough.
Our analysis shows that collectively, renters could still face a £55 million a month gap in their rents as people aren’t able to work. This adds up to a £660 million black hole in renters’ finances over the next 12 months if no further action is taken. This puts a squeeze on people’s finances, causing debt and rent arrears – and unless something is done, it will also lead to huge numbers of evictions and homelessness once the evictions ban ends.
To avoid spiraling debt and people losing their homes across the country, the government must do more. We think there are three crucial steps to avoid a disastrous cliff edge ending to this emergency:
- increase the housing element of Universal Credit to cover the cost of average rents, and lift the benefit cap so people can access this money
- give judges real power to ensure no-one is evicted as a result of coronavirus (COVID-19)
- ensure anyone with nowhere safe to stay can access emergency accommodation where they can follow public health advice
A fast, effective response
The first thing to acknowledge is that these changes are tweaks to the current system that will help people now. In these unprecedented times, it is tempting to rip up the system we have and start again. Some have been calling for exactly this. Cancel all debts, pay everyone a basic income, and reset after the epidemic ends – void this period, just like what’s being proposed for the Premier League. However, whether or not you think this is desirable, most of it is simply unworkable. A faster, more effective response for this temporary period is to look at the tools already in place to help protect people.
We need a system that would ensure government more adequately covers the costs people are facing while they are not able to work or move. Luckily, we have exactly this in place already – Universal Credit – and particularly the part designed to cover rents, LHA. We have worked with organisations representing renters, landlords, children, people with disabilities, and many more across our society to make the case for ensuring LHA covers average rents and lifting the benefit cap. A massive 150,000 members of the public joined the call.
Some question if this would only lead to landlords increasing their rents to cover the increase. The theory behind this was the argument made by the government when it first reduced LHA from covering average rents, to the lowest third of rents. The assumption was that dropping the LHA rate would see rent levels across the country come down. But what followed was that landlords didn’t drop their rents – instead, rents continued to rise and those in need were priced out. We saw a massive increase in homelessness and debt follow.
Evidence from the Institute for Fiscal Studies (IFS) and the government shows that changes in LHA rates have very little or no impact on rents – and it’s not hard to see why. In seven in 10 (72%) local authorities, LHA claimants make up less than 30% of private rented homes – the numbers are just too small to make a difference to rental markets, even within a single local authority. Making changes to LHA during this health emergency could minimise any impact on rents.
So part one of the plan,if we want to avoid debt, is to restore LHA to cover average rents and lift the benefit cap.
Part two is about ensuring, as Robert Jenrick said, that ‘no renter who has lost income due to coronavirus will be forced out of their home’. While possession proceedings are currently on hold, the cliff edge is fast approaching. Without urgent reform to the current system, thousands of renters could face eviction because, for example, they lost their job due to coronavirus. The government has already recognised that renters have an extreme disadvantage in the imbalanced relationship between landlord and tenant – and it was right to commit to scrap Section 21 ‘no-fault’ evictions.
Scrapping this outdated law now would ensure that any new tenancies are protected from no-fault evictions. But it wouldn’t help renters already in their home. To help them, temporary action is needed – government must legislate so that judges are able to decide whether it is reasonable to evict someone affected by coronavirus. For example, if they owe rent because of loss of income during lockdown. At the moment, for most private renters, judges usually have no choice but to allow the evictions. But with this in place, they’ll be able to ensure landlords first work with their tenants to find a way forward.
Provide emergency accommodation
Lastly, how do we ensure people do not end up sleeping rough? We are hearing from those who have lost their home during this crisis being refused emergency accommodation from their local authority. This includes those accommodated in emergency hotel rooms, those who aren’t and the many more people facing street homelessness each day . The government is right to say they should not face a return to the streets, but unless they go further this is what awaits them. Given this urgency, the government should direct councils to provide emergency accommodation to anyone who has nowhere safe to stay, and back this up with the funding required. Otherwise we risk people sleeping rough during the pandemic, and more going back to the streets when hotels re-open and lockdown ends.
When the lockdown lifts, we’ve got to build a better future for everyone and we are looking into how we restart the engine of our economy in a way that we build the homes people deserve. But right now we face a real disaster of debt and homelessness if we don’t act. That is why we are calling on the government to take up this three-point plan.
Bringing in these three changes would give our country chance to rebuild. But we need the government to act now – and we need your help to get this done.