The emergency fund would be limited to helping tenants pay off any unexpected rent arrears built up since the start of the lockdown.
Despite recent government increases in housing benefit rates to cover the bottom third of private rents, thousands are still falling through the gaps in the welfare safety net.
The coalition argues the fund would help both tenants to keep their homes and landlords who rely on rental income for their livelihoods.
In a letter to Chancellor Rishi Sunak the coalition of bodies suggests:
- rIng-fenced funding administered through local authorities, using a mechanism like the Discretionary Housing Payment;
- an additional cash injection into local welfare assistance schemes;
- government backed, interest-free loans for tenants not eligible for the above support.
Specifically, the proposal outlines ringfenced funding with a limited timeframe, to avoid the unintended consequences of discouraging tenants from making payments where they are able to do so.
Tenants could also claim for a lump sum to be paid directly to the landlord.
Here’s the letter to Sunak in full:
As organisations representing the interests of tenants, landlords and letting agents we write to call for a financial package to support tenants in private rented housing struggling with rent arrears as a result of the COVID-19 pandemic.
Whilst we have each had differences of opinion about the framework and rules required for courts to begin to hear possession cases again, we are united in wanting to sustain tenancies wherever possible.
To support this it is vital that urgent action is taken to address the arrears of those who have built them through no fault of their own. This would greatly assist not just tenants but also those landlords who especially rely on rental income for their livelihoods. It would also reduce the risk of homelessness as a result of rent arrears.
Government action like the furlough scheme and the increase in Local Housing Allowance has supported many tenants to continue their rent payments, however it remains the case that there are many instances where support is still insufficient. With the courts reopening on 24th August for possession hearings for the first time since the crisis began, further measures are needed to help sustain tenancies.
The spending review in the autumn provides an important opportunity to ensure that going forward the benefits system provides claimants with the security they need so that rents can be paid. In the interim however, a short term financial package is desperately needed to cover rent arrears built up as result of the pandemic.
1. Longer term support through the benefits system is essential, and we continue to call for reforms to Local Housing Allowance, Universal Credit and the benefit cap.
2. However, the nature of the coronavirus crisis requires a one-off intervention to address specifically Covid-related arrears. This will enable both tenants and landlords to continue the tenancy and support tenants to remain in their homes.
We propose the development of a specific fund to address COVID-related arrears.
This fund should support tenants to pay-off arrears that have been built up since the start of the pandemic in March. We propose a range of mechanisms through which tenants should be able to access support:
• For those tenants in receipt of benefits, or who would otherwise be eligible for benefits but have no recourse to public funds, support should take the form of a dedicated grant. This could be administered by local authorities, using a mechanism like the Discretionary Housing Payment, but it must be designed so that it gets to those that need emergency funding now to pay off their arrears.
• Further funds could be made available through an additional cash injection into local welfare assistance schemes, building on the £63 million the Government committed in June 2020.
• For other tenants, such as those who have been furloughed and are struggling to pay their rent now but will be able to pay in the future, support should take the form of a Government-backed, interest-free loan. This could be administered by a third party such as a credit union or a bank or building society.
Further details of our proposals, and how we envisage them operating can be found enclosed and we strongly urge the Government to respond positively, and swiftly, to them.
We would welcome the opportunity for a roundtable discussion with your department to examine our proposals further.
We look forward to hearing from you.