A £360 million wall of rental debt built up during the pandemic, combined with cuts to Universal Credit, threatens to leave hundreds of thousands of tenants facing long-term housing insecurity and problem debt.
That’s according to StepChange analysis of new YouGov polling. StepChange, the UK’s leading debt charity, says renters are one of the groups most likely to have faced a prolonged loss of income or experienced a negative financial impact as a result of the pandemic. It claims that approximately half a million private tenants are now battling to stay on top of £360 million in rent arrears.
YouGov's polling shows how the government’s controversial planned £20 per week cut to Universal Credit ‘threatens to escalate entrenched difficulties caused by the crisis and exacerbate a two-speed recovery’.
According to the charity’s findings, some 558,000 Universal Credit claimants are in Covid rent arrears – including private and social renters. They say the planned cut means they will struggle to pay existing rent debts over the next 12 months.
In spite of the successful reopening of the economy, StepChange’s polling shows how rent debt levels have not budged over the past nine months and threaten to escalate as Covid support is withdrawn.
Nearly a quarter of a million (225,000) private renters now expect to lose their homes due to not being able to keep up with rents, while many see no way out of entrenched pandemic-related difficulties.
StepChange is now warning that unless the government does an about-turn on Universal Credit and delivers an urgent package of targeted support, many private renters face long-term housing insecurity and prolonged debt harm. This includes the threat of court action, long-term housing insecurity, homelessness and eviction, the charity says.
The organisation’s research points to both the deepening and widening of difficulties from the £20 per week cut, which is unpopular among many Tory MPs.
The charity found that 4.3 million people expect to carry on with a claim over the next twelve months, 1.3 million more than were on the benefit before the pandemic began in March 2020, with reduced support.
While some tenants are optimistic about recovery, with nearly a quarter (24%) expecting to find more work in the next year, for many in deeper debts, work will not necessarily avert financial difficulties.
The research showed that one in ten in-work renters in arrears expect to be evicted from their homes as a result of these arrears in the next twelve months. StepChange believes that targeted support remains essential to stop the looming shadow of serious debt harm.
The charity has been leading calls during the pandemic for the government to provide an emergency financial support package to help renters worst affected, similar to schemes in Wales and Scotland. This, it argues, would help renters to safely wind down Covid-related rent arrears and assist tenants in keeping their homes.
It’s also urging the government not to go ahead with its plans to cut £20 a week from Universal Credit, instead offering the financial support tenants need to sustain tenancies and keep up with essential costs.
The charity says this would help to reduce the long-term cost to public services like housing, health and mental health that would otherwise be inevitable – and help to offset some of the annual £8.3 billion cost of problem debt to the economy.
“For 18 months, renters have been at the sharp end of the pandemic. Sadly these figures show a huge number of people worried about how they will keep up with their rent. While the end of restrictions will allow some get back to their feet, thousands are still facing a mountain of rent debt they are unable to address alone,” Phil Andrew, chief executive of StepChange, said.
“The Government’s own research shows that private renters have been hardest hit by the pandemic, and that numbers in rent arrears have more than doubled since March 2020. Covid support schemes, while a lifeline for many, haven’t been able to help renters address their arrears and with cuts to Universal Credit and the end of furlough imminent, there is a real danger of thousands losing their homes.”
He added: “That’s why StepChange is calling for a dedicated financial support to help ensure renters can safely wind down Covid rent debts and keep their homes. By establishing a dedicated rent debt fund, and by scrapping the planned Universal Credit cut, the Government can avert the threat of a rise in evictions, problem debt and homelessness that will compound financial and social problems and hamper economic recovery.”