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Tenant loans the only answer to growing arrears, says think tank

A think tank says large scale intervention in the rental market via loans to tenants is the only way of addressing the growing arrears problem.

A new report from the Resolution Foundation - which is non-political but has an advisory council led by former Conservative MP David Willetts - says over 750,000 families are currently in arrears with their housing payments, and over half likely to have fallen behind as a direct result of the Covid-19 crisis.

The report looks generally at both the private and social housing sectors, and finds that over 750,000 families were behind on their housing costs in January, an increase of around 450,000 compared to pre-pandemic levels, and that renters have been hit hardest.


Some 300,000 of the total number of families in arrears also include dependent children, suggesting they are especially vulnerable.

Specifically it claims that 24 per cent of private renters have seen their earnings fall during Covid-19 crisis, compared 16 per cent of working age adults with a mortgage.

It also says that 10 per cent of families with a mortgage have received a mortgage holiday from their provider, giving them respite.

It then goes on to say: “In contrast, just three per cent of private renters and two per cent of social renters successfully negotiated rent reductions over the pandemic period. Strikingly, five per cent of private renters were also refused reductions, despite asking for them – 10 times the refusal rate for mortgagors in the same position.”

The think tank assertions are based on a survey of 6,389 adults taken in late January. 

The foundation accepts that support for renters has come via the temporary boost to Local Housing Allowance introduced last April, and Discretionary Housing Payments.

But it says: “DHPs are not reaching a large number of those with arrears. More than half of private renter families with arrears are not currently in receipt of Universal Credit or Housing Benefit, and are therefore ineligible for payments.”

It concedes that the ongoing evictions ban has offered some security, preventing families under the most strain from falling into homelessness during the pandemic period.

“Without further government intervention however, it warns that the rent arrears crisis will worsen in the months ahead – leading to an increased number of court possessions proceedings, which tend to be lengthy, difficult, and upsetting for tenants and landlords alike” it continues.

But it calls for a boost to the DHP system, so that it can reach more families in need, and tenant loan system for England, through which the government would directly support families behind on their housing payments.

“Renters have been particularly badly hit. Many have taken huge hits to their earnings and have limited savings …  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 … This situation will worsen without significant government intervention” insists Lindsay Judge, research director at the foundation.


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