The national lockdown has been a shared experience, one that has affected us all, and not something we ever imagined would or could happen to us. But it has not affected us all equally, our stories are not the same. While some people have been fortunate to be able to work from home, for others this was simply not possible.
Government safety net hasn’t caught everyone
Many people in the most precarious, low paid employment also live in the most insecure housing tenure – the private rental sector (PRS). We know that before the crisis, people living in the PRS were spending on average over 40% of their income on rent. We also know that before the crisis, more than 60% of people living in the PRS had no savings.
While the government rightly sought to mitigate the worst effects of the crisis for people living in the PRS through measures such as the furlough scheme and increasing the level of Local Housing Allowance (LHA) to cover the bottom 30% of the market, this safety net has not caught everyone.
The emergency provisions were brought forward in a hurry, to prevent mass homelessness during a pandemic, driven by the threat of mass rental arrears and evictions from a sector not designed to sustain a financial shock. But the financial help didn’t reach everyone, and some have been left in rent arrears through no fault of their own – it is now right for the government to return to the issue and catch those that fell through the net.
The growing debt that many face
We set out our proposals for government early on, advocating for judges to be given discretion when hearing possession cases – meaning they could consider the impact of coronavirus and not be forced to automatically grant eviction. This would have negated the need to extend the eviction suspension, which the government has now had to do, twice. It is still the right course of action and the government should put this in place when parliament returns, but there is also now a need to deal with the growing debt that many face.
The benefit cap – a policy introduced long before coronavirus – meant that even though LHA was increased in light of the crisis, for some households the cap would negate this increase. So, in this instance, we have an existing policy undermining emergency measures. People who have had their hours reduced at work, would not receive any increase to their benefit levels if they had already hit their cap, regardless of their rent level. Others who have suffered redundancy may now be living in a property previously affordable, which is now way beyond the LHA rate. Add to this a chronic housing emergency due to a lack of social housing, the five-week wait for the first payment of Universal Credit and we had all the conditions for a perfect storm of rising rent arrears – long before coronavirus hit.
Since the crisis, the number of private renters who are now in arrears has doubled, with 322,000 falling into rent-debt since lockdown. In addition, nearly 4 in 10 (39%) of private renters are now in receipt of LHA – a rise from 3 in 10 back in February.
Many of these renters will not have the ability to pay both the rent going forward and the arrears incurred by the impact of coronavirus. Without savings and with benefit levels that don’t come close to covering the average cost of rent, there is no route to paying back debts. This is why we have worked as part of a coalition representing renters, landlords and agents, to set out how government can help renters to clear their arrears.
A united call for government action
Along with Citizens’ Advice, Generation Rent, Crisis, The National Residential Landlord Association and The Association of Residential Lettings Agents, we are calling on the government to provide a package to help renters keep their homes by providing:
- Ring-fenced grants for renters already in receipt of government benefits, or those who would otherwise be eligible for benefits but have no recourse to public funds – to be distributed by local councils.
- Government-backed interest-free loans for other tenants who can afford to pay them back, such as those who have been furloughed or are struggling to pay their rent now but will be able to in the future. This could be administered by a third party such as a credit union, bank, or building society.
The government acted to suspend evictions to provide protection for renters, which shows they recognise there is a problem. They have bought some time but need to use it to resolve the problems. Suspension is not protection. Judges need the discretionary powers to protect renters and government needs to sort out a financial scheme for arrears.
As we move on from this chapter in our shared history, what will be remembered is how much was achieved through extraordinary acts of compassion. From the government’s own ‘Everyone In’ initiative, to the retired doctors and nurses returning to work on the frontlines. The stories we will tell, will not be of how the masses were fine, but of the lengths we went to, to help those most in need.
The latest extension to the eviction suspension, a window of just four weeks, has bought the government enough time to take the necessary steps to protect renters and clear ‘Covid arrears’. They must get it right this time.