450,000 families are thought to have fallen behind on rent, as a result of the coronavirus crisis, according to a new report by the Resolution Foundation. The research indicated that more than 750,000 had been behind on housing costs last month, a 450,000 rise when compared to January 2020.
The report examined how families have managed their housing costs over the Covid-19 period which found that although the Government has done much to support families over the past year (not least via the furlough scheme and the £20 per week uplift to UC), it is clear that financial strain has grown as the pandemic has worn on.
Using new data from a representative survey of working-age adults, it shows that housing arrears have grown steadily over the crisis, and that renters are at the sharp end when it comes to housing cost pressures.
The Foundation says that 2021 may look set to be brighter year, but the stock of housing debt that has built up over the pandemic will not resolve itself. We need to identify a clear and continuing role for policy in supporting incomes directly to avoid the situation getting worse. But alongside this, action is also required to mediate effectively between those who owe and are owed, and to help families reduce their housing arrears via both grants and loans.
More findings showed that 9 per cent of families in the social rented sector were behind with their housing payments in January 2021, alongside 6 per cent of those renting privately and 2 per cent of mortgaged homeowners. These percentages translate into significant numbers, over 750,000 families were behind with their housing payments in January 2021, 300,000 of which contained dependent children.
Close to one-quarter (24 per cent) of private renters have seen their earnings fall during the last ten months, compared to one-in-six (16 per cent) working-age adults with a mortgage. The survey shows that twice as many privately-renting families entered the pandemic with no savings compared to mortgaged home owners (22 per cent and 11 per cent respectively).
Despite widespread calls for forbearance in the face of the Covid-19 shock, 3 percent of private renting families have been able to negotiate a lower rent over the last ten months (a further 5 per cent have been refused), compared to one-in-ten (10 per cent) families with a mortgage who have received a mortgage holiday.
More than half (56 per cent) of private renter families with arrears are not in receipt of benefits, leaving them ineligible for a Discretionary Housing Payment.
The report recommends that the Government should continue to support those on the lowest incomes by retaining the UC uplift of £20 per week beyond the end of March 2021.
It should also fund the Discretionary Housing Payment budget to at least the same level as 2020-21, and recognising the exceptional circumstances of the last year, allow councils to roll-over any DHP underspend to 2021-22.
It could also follow the example of Scotland and Wales and introduce a tenant loan scheme in England for those who have built up housing debt over the pandemic period as well as introduce a pre-action protocol for private landlords requiring them to take robust action to negotiate a repayment plan with indebted tenants before proceeding to court.
Resolution Foundation’s Research Director Lindsay Judge said “To make matters worse, measures that could ease the pressure, such as discretionary housing payments from local authorities and negotiated rent reductions from landlords, are not getting through to those that need them.”