The rising cost of living will put further pressure on these major drivers and likely make things worse for those who are vulnerable to falling into arrears, a new report by think tank Demos has found.
The report explores the experiences of people in rent arrears in social housing and finds that low and fluctuating income and large and unexpected costs are two main drivers of social housing renters falling into arrears.
Ben Glover, Deputy Research Director at Demos, said: “It has become all too common for renters to be in financial difficulty over recent years, and with a new cost of living crisis, life could get even harder for these renters.
“With low income and high costs two of the main reasons why renters tend to fall into arrears, the rising cost of living may inevitably push those who are already vulnerable over the edge and into arrears – resulting in a rent arrears crisis.
“Our report is clear: there is no evidence of widespread misspending among people in rent arrears. The Government and housing associations have a duty to urgently help those already in arrears, and prevent those who are struggling or vulnerable from getting into a similar position.”
Demos conducted a focus group and a series of interviews with social housing residents that have been in rent arrears in the last year, drawn from financial diaries.
The new research, supported by the Hyde Foundation, also finds that the benefits system is a factor pushing people into arrears.
The report suggests that the Universal Credit five-week wait is a significant driver. Government’s changes to pay benefits monthly, instead of weekly, and to pay housing benefit to the recipient once they have moved onto Universal Credit, have increased the risk of arrears.
The report, titled The Bottom Line, sets out a number of recommendations to both prevent people from falling behind rent payments, and to help people already in arrears, including:
- The Government should introduce a dedicated ‘arrears loan’ scheme to expand the new vulnerable tenants fund.
- The Government should partner with credit unions to enable tenants to avail of membership benefits, including low cost loans and savings products.
- The Government should urgently reduce the five-week UC delay and issue more Alternative Payment Arrangements in order to prevent more people from going into arrears.
- Mental health support services should engage with social landlords to ensure tenants are offered access to mental health support when struggling financially, and to ensure landlords are aware of mental health crises occurring within their tenant population.
Kerry Starling, Hyde’s Director of Communities and Social Impact said: “We supported this report because we wanted to better understand the drivers behind rent arrears, and how as landlords, we can best support our customers in financial difficulty.
“We wanted to learn how we can develop our services further, with the customer at the heart of decision making – whether it’s money and debt advice, support to access health and social care services, resolving complex benefit issues, or helping our customers into jobs and training.
“We’ll use the research and findings of this report to help shape the way we collect rent. We always encourage our customers to talk to us as soon as they are in difficulty.
“But, following on from the report’s recommendations, we’ll be looking at ways to connect with them even more and build that trust. We’re going to strengthen our relationships with organisations such as credit unions, and continue to invest in innovative approaches to alleviate hardship for our customers.
“We also want to share the report’s findings, and our subsequent approach, to allow others to adopt and develop best practice, therefore making a real impact on the sector.”