Rent debt crisis has potential to 'treble homelessness' | News

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The Housing Finance Network

Rent debt crisis has potential to 'treble homelessness'

Homelessness will treble this year unless the government acts to end the rent debt crisis faced by private renters as a result of the economic shock of coronavirus, Generation Rent warns today.

While the government has suspended all eviction cases in the courts until 24 August, there is no protection beyond this point.

Rates of rent arrears have risen from 4% before the pandemic to 13%, which could make 45,000 households homeless, costing councils an extra £117m in temporary accommodation and other support.

The increase in arrears is despite the Government’s increase to Local Housing Allowance (LHA) to cover 30% of homes.

592,000 - over half a million - renters are reporting being behind on rent payments in England alone and include students, non-UK nationals with no recourse to public funds (NRPF), and people with savings exceeding £16,000 but who can’t access it – as well as those whose rent is higher than the LHA.

To keep renters in their homes and end the rent debt crisis, Generation Rent is calling on the government to:

  • Introduce a new Coronavirus Home Retention Scheme, which would clear rent arrears not covered by the welfare system by guaranteeing landlords’ income up to 80% of the rent.
  • Suspend evictions for rent arrears arising due to the pandemic, so that renters have certainty that they can stay in their home beyond 24 August.
  • Raise LHA and remove caps to cover median rents, and expand eligibility for Universal Credit, so that people aren’t left destitute or forced to borrow or run down savings to keep a roof over their head.

Generation Rent estimates this fund would require £750m per quarter.

Alicia Kennedy, Director of Generation Rent, said: “There is a rent debt crisis and renters are at risk of losing their homes. The government has already intervened to stop businesses from going under, and mortgage holders from losing their homes. They need to give the same protections to renters who still face losing their home or going bankrupt as a result of rent arrears. 

“There are too many holes in the welfare system and our package of measures would ensure no renter faces destitution or becomes homeless due to Covid-19. 

“But with the economy contracting, the government should not be expected to sustain rent levels set when the economy was strong. That’s why we propose that landlords would only be guaranteed up to 80% of their rent.”