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Author: Rent Guarantor

05/03/2021

As the UK government adopts a cautious approach to ending a lockdown that's been put in place to protect the population and the NHS from the spread of coronavirus, a recent report shows that among households, tenants have fared worse than homeowners. With figures showing a steep increase in the number of tenants in arrears as a direct result of the pandemic, think tank the Resolution Foundation calls for the government to initiate a tenant loan program to support tenants in financial difficulties due to the effects of Covid-19.

This call for additional support comes despite the recent extension to the ban on tenant evictions, which the Law Society of England and Wales has welcomed. Both bodies state the eviction ban will have a positive effect on some tenants’ situations.  However, it is also argued that this extension still isn't enough to help the hundreds of thousands of tenant households in financial difficulties amid the pandemic. 

750,000 Households Fall Behind on Rent Payments

Research from the Resolution Foundation shows that in January 2021 there were 750,000 households living in rental accommodation who are in rent arrears. That compares with around 300,000 in January 2020 and suggests that some 450,000 tenant households are in arrears as a direct result of the effects of the Covid-19 pandemic.

Specifically, the report shows that 24% of private renters have experienced a drop in earnings during the pandemic compared with 16% of working adults who own a home. In addition, while there has been an extension to the eviction ban, when looking at home owners, 10% of families with a mortgage have been able to secure a mortgage holiday to gain financial respite during the current difficult period. At the same time, just 3% of private renters and 2% of social renters have been able to negotiate a rent reduction.

Against this backdrop, the think tank states that more government intervention is required to stop the current situation with rent arrears becoming worse. One option it has suggested is a tenant loan programme to provide direct support to tenants struggling with rent arrears.

“The UK is currently experiencing a mounting arrears crisis, with more than 450,000 families having fallen behind on housing payments as a result of the pandemic,” said Research Director at the Resolution Foundation, Lindsay Judge. “Ministers must take action by boosting the DHP system, and introducing a UK-wide tenant loan system, to ease the pressure on tenants, landlords and the courts.”

Eviction Ban Extension Positive

With many of the UK’s renters feeling the financial effects of the pandemic, the government’s decision to extend the current eviction ban has been welcomed and the Law Society of England and Wales specifically state that it’s a positive decision. However, the body adds that it doesn’t protect all tenants and as time goes on, more people living in rental accommodation could fall into deeper financial difficulties leading to an increase in the number of eventual evictions due to a build-up of rent arrears.

“We are pleased that some tenants who would otherwise be facing eviction will be able to stay in their homes, particularly given the colder weather and the new variants of the virus, said David Greene, President of the Law Society. “However, it should be noted that those with significant rent arrears are exempt from the ban, and as time goes on it is likely that more tenants will be evicted as a result of significant amounts of overdue rent.”

This highlights that while current government measures to help tenants living in the UK are welcome and useful, they don’t go far enough to helping everyone who has been financially affected by the pandemic. It’s likely that some tenants would benefit from additional government-led support such as a loan programme, however, the number of tenants who would be able to make use of such a programme would depend on whether or not this is something that would be created and how quickly.

What is clear is that tenants living in the UK currently require government support beyond an extension ban. But how likely it is that any additional support will be forthcoming, currently remains to be seen.