Thursday, 7 January 2021

COVID-19: Ministers Need to Get a Grip of the Rent Debt Crisis

In a joint statement following the reintroduction of a national lockdown, the National Residential Landlords Association, The Big Issue and Ride Out Recession Alliance, Shelter, ARLA Propertymark, the Nationwide Building Society, and StepChange the Debt Charity have said:

“Many thousands of private renters and landlords across the country now face rent arrears due to the impact of the pandemic.

“Ministers have failed to address the core problem of debts which have built despite the financial package put in place so far. Indeed, the Chancellor confirmed that housing benefit will not be linked to the cost of renting for future years.       

“Renters, landlords and letting agents cannot be expected simply to muddle through indefinitely where they face these financial difficulties. The Government needs to develop an urgent package to help renters in paying off arrears built since March last year.

“Without further action, debts will continue to mount, making it far more difficult to sustain tenancies and keep renters in their homes after the pandemic.”

The NRLA recently published new research relating to this issue. A survey of tenants, carried out by Dynata for the NRLA, suggests that more than 800,000 private renters in England and Wales have built rent arrears since lockdown measures began.

Whilst the average arrears were between £251 and £500, the survey finds that of those in arrears, 18% now have rent debts of more than £1,000. This would equate to over 150,000 renters.

For residential tenancies, the government lifted the stay on all forms of possession proceedings on 21 September 2020, subject to restrictions, but there is currently a ban on enforcing possession orders until 11 January 2021.

That ban is subject to exceptions including trespassers, nuisance or where there are substantial arrears of rent, as defined in the legislation.

The Prime Minister has said the ban is “under review” after Labour leader Sir Keir Starmer called for it to be extended, but at the time of writing nothing has been announced. 

It’s likely the ban will be extended, so why is this being left to the last minute? [UPDATE 08/01/21 - the ban has now been extended until 21 February 2021, but with some important changes]

Nevertheless, as Ben Beadle of the NRLA says:

“Ministers need to accept that simply banning repossessions does nothing to keep tenants in their homes long term. In fact, it will achieve the complete opposite - kicking the can down the road just means larger debts piling up, creating a bigger problem for tenants and also for landlords.  

To sustain tenancies the Government needs to provide an urgent financial package to get rent debts built due to the pandemic paid off.”  

The NRLA is calling for a financial package that includes a mixture of government guaranteed, interest free, hardship loans and a boost to benefits for those relying on them, rather than cutting this support as announced in the Spending Review.

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