Covid arrears leave renters struggling to find a new home
Thousands of private renters who have built arrears during the pandemic face problems finding an alternative home because of damage to their credit scores according to a new survey.
With the Government refusing to support tenants and landlords in tackling COVID related arrears, this research finds that approximately 210,000 tenants may face severe difficulties in getting landlords to let to them in future.
Ahead of emergency restrictions easing in the private rented sector on 1st June, results from this new survey of over 2,000 private renters in England and Wales show that seven per cent have built arrears since lockdown began in March 2020.
A quarter of these with arrears said that their landlord had attempted to reclaim these by seeking a court order. Such orders, where successful, damage a tenant’s credit score – an outcome which makes it for harder for them to access new housing in the future.
The data, compiled by research consultancy Dynata for the National Residential Landlords Association, shows that the average amount of rent owed by those in arrears during the pandemic is now almost £900.
The figures also show that over 80 per cent of renters now in arrears were not behind on their rent payments when the pandemic began. 30 per cent of those who are presently in arrears now owe £1,000 or more.
The majority of tenants in arrears do not qualify for emergency housing support provided by councils to help those in receipt of benefits. The Government has also frozen housing benefit rates in cash terms, a policy the Institute for Fiscal Studies has branded as “arbitrary and unfair.”
Ben Beadle, Chief Executive of the National Residential Landlords Association, said:
“As the private rented sector moves out of lockdown measures, the Chancellor has failed to provide tenants with the support they need. This is especially the case for the majority of those in rent arrears who do not qualify for benefit support.
“Without urgent assistance, many tenants face the prospect of losing their home needlessly as landlords struggle to shoulder the cost of arrears. Affected tenants also potentially face the negative impact of damage to their credit scores.
“The Government needs to develop a financial package which ensures that benefits cover the rents of those in receipt of them. For those who do not qualify for benefit support, an interest free, government guaranteed tenant hardship loan should be established, similar to those in Wales and Scotland.”
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- The research consultancy, Dynata questioned 2,022 private tenants in England and Wales in May 2021. It found that since 17th March 2020 7% of tenants had built arrears which they have yet to pay back:
- 3.3% previously had no arrears but reduced or deferred the amount of rent they were paying and now have arrears.
- 1.4% previously had no arrears but stopped paying rent without prior agreement from the landlord/letting agent.
- 1.1% agreed a rent-free window with their landlord/letting agent and the rent now needs paying back as agreed.
- 1.2% said they had existing arrears, and these have continued to increase.
Of the 7% who had built arrears since 17th March 2020, 25.9% said that their landlord had attempted to reclaim these arrears through a court order (Moneyclaim). This would come to 210,000 private tenants in England and Wales.
- The figure of 210,000 is the estimated number of family members in households who have faced a court order to recover outstanding rent arrears. This estimate is based on estimates of household size and the number of private rented sector households from surveys undertaken by Office for National Statistics and the Ministry of Housing, Communities and Local Government.
- Details of the easing of restrictions in the private rented sector can be accessed at: https://www.gov.uk/government/news/support-for-renters-continues-with-longer-notice-periods.
- Research for the Resolution Foundation has found that 56% of private renter families with arrears are not in receipt of benefits, leaving them ineligible for a Discretionary Housing Payment.
- Following the Spending Review in November 2020, the Institute for Fiscal Studies noted that:
“Another expansion the government brought in eight months ago was increasing the maximum amount that low-income private renters can get to help with their housing costs, so that they can afford the cheapest 30% of properties in their local area. They have now announced that those maximum amounts will be frozen in cash terms going forwards. This has two consequences. First, as time goes on and rents rise, the fraction of housing that private renters can afford will steadily dwindle. Second, the support that low-income renters get to help with housing will be related not to the current level of rents in their area, but to rents in 2019. That will look decidedly odd in, say, 2025. A similar policy over the past eight years resulted in those in some high rent areas getting less support than those in some low rent ones. It is entirely coherent to decide that the state should reduce its support for low-income renters but doing it in this fashion is arbitrary and unfair, and its consequences will only become more bizarre over time.”
- The Housing, Communities and local Government Select Committee has estimated the cost of a financial package to tackle COVID related rent arrears to be between £200 and £300 million. Details can be accessed at: https://committees.parliament.uk/publications/5342/documents/53217/default/.