More than a third of furloughed private renters (37%) are worried about being able to pay their rent when the coronavirus lockdown ends, according to new research published yesterday by the independent Joseph Rowntree Foundation (JRF).
This means around 250,000 people in this group could be in a position where they struggle to meet their housing costs when the lockdown ends.
The research, based on a sample of 1,031 private renters in a YouGov survey of 6,430 UK adults, demonstrates the precarious situation faced by many households who are renting privately.
Whilst the changes to the Coronavirus Job Retention Scheme announced last week seek to mitigate a rise in unemployment when the current arrangements end in July, it remains likely that more workers will lose their jobs in the coming months and not be able to pay their rent.
This new research indicates that if that happens, large numbers of people could need to rely on the social security system for support with their housing costs for the first time.
The government recently temporarily increased the amount of support private renters can get for their housing costs, known as Local Housing Allowance (LHA) up to the cheapest 30% of local market rents.
This was a step in the right direction, but for many it still leaves a big gap between the support available and the real cost of renting, especially in areas with high rents where an overall cap prevents households from getting the support they need to meet their housing costs.
Renters in a two-bedroom property who were eligible for all their rent to be covered would see a gap of around £150 a month in Brighton, £100 a month in Central Manchester, York and Cambridge and around £80 a month in Liverpool.
In some Central London boroughs[1], this gap would be £1,715 a month.
JRF is calling for an increase in LHA to cover median rents in all areas, as well as the removal of the national cap on the amount of LHA that can be paid, so that it does not limit support in high-cost areas.
JRF’s research found that in the private rented sector as a whole, a quarter of all private renters (23%) are worried about paying their rent.
For households with children this rises to 31%. 42% of private renters have already seen their income decrease due to the impact of coronavirus.
The temporary ban on evictions introduced by government is currently in place until the end of June, and there are fears of a surge in eviction proceedings if it is not extended, as large numbers of tenants will no longer be able to afford their rent.
This could unravel the considerable progress the government has made by housing thousands of homeless people, as high housing costs are a significant driver of homelessness.
Commenting on the findings, Darren Baxter, Policy & Partnerships Manager at the Joseph Rowntree Foundation said:
“Renters are really worried about not being able to pay the rent, both right now and in the future when the lockdown ends, particularly those who’ve been furloughed.
“The furlough scheme has been a lifeline during the pandemic, but it will not save every job, and many private renters who are let go by their employer will need to turn to the social security system for help with housing costs.
“The government has temporarily increased housing benefit levels to the lowest third of local rents, but this still falls well short of what is needed for the typical renter to pay their rent.
“As a country we believe in looking after each other when times get tough.
“To achieve this the government should increase Local Housing Allowance rates to cover median local rents, and lift the national cap so that renters in all areas of the country will get the lifeline they need to stay afloat and keep their homes.”
This is nothing compared to the nuclear bomb that could be announced 12th Jun 2020, following recommendations by a commons select committee. Financial ruin for agents and landlords?
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Go on………?
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I am surprised by why what was announced a couple of weeks ago hasn’t hit the media and more importantly the trade organisations that represent letting agents and landlords haven’t said anyhting, but then I might have missed the announcement but appears I wouldn’t have been the only one.
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A little while ago this was mentioned by a high profile industry figure:
“behind the scenes” there are moves to adopt the same protocol for repossession cases in the private rented sector as currently apply in the social housing sector. In essence, the landlord must show to the courts that a repayment plan has broken down before the courts will entertain an order for possession. The tenant normally pleads poverty and it is not at all unusual for tenants with a rent debt of thousands of pounds to seek to repay the debt at £10 per week. These changes may be being accelerated by COVID-19 but the changes are intended to be permanent. Together with the removal of s8 notices, this will mean that it becomes vitally important we do not let properties to parties who may be a debt risk, as the existence of rent arrears will no longer be a ground for automatic possession, only RISING arrears will be considered by the courts”
could this be that nuke???
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Good try but no and yes that sernario was mentioned.
I’m interested to see how many people pick up on my hint and importantly want to know, so after it was (ignored?) missed yesterday, if people would like to hit ‘draperger’ like button above we shall know the interest before the shock is announced.
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SHELTER:
If you have received a section 21 or a section 8 notice from your landlord you should stay in your home. Evictions take time and you don’t have to leave at the end of your notice under current law
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This is not the nuke but an indication of how Shelter are preparing for the announcement?
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The Secretary of State, Robert Jenrick, told the Housing, Communities and Local Government Select Committee in May 2020 that a decision on an extension would be made 12th June 2020 on the current ban on evictions, when the three-month moratorium, as set out in the Coronavirus Act is about to end.
The select committee has recommended that the option to renew the moratorium for an additional six months as laid out in the Coronavirus Act is implemented and to include all notices issued for possession in 2020. The government is not obliged to listen to the select committee, but …..
They have asked for all notices issued in 2020 will no longer be valid and possession proceedings will not be possible before 2nd January 2021. What is not clear, if they follow this path is, will statutory notice period have to be re-issued from 1st January 2021 if previous issued are no longer valid (null and void)?
Considering on an annual basis something like over 40,000 possession orders are issued in normal times, this figure is going to hike with Coronavirus issues including the outstanding possession order claims from 2019.
How on earth is the system going to cope with the mass applications in January 2021?
Length of time to process will mean that some landlords could see no rent for 15 plus months (no rent = no buy-to-let or agents’ payments and financial distress for landlords who rely on its income e.g. pensioners/nursing care)
“Tenant from Hell” will see this as an open book to get a free home and stop paying rent, and as these are the ones you can never chase for the arrears and only leave when you can eventually get a bailiff …… melt down.
In the meantime, the Government is to rush the Housing Reform Bill outlawing Section 21 and reform procedures for Sec 8.
Should the select committee’s recommendation go ahead, it would nuke the housing market. Many agents and landlords would fall into hardship and sour the industry to the extent that eventually many will sell up and many more will be discouraged from coming into the market.
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Is this evening breaking news by Robert Jenrick of an extension to the end of August only an interim extension as it seems to go with the select committees ethos and the government are treading carefully, knowing full well the consequences for the industry as mentioned above?
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Thanks for this informative post. The recovery of whole situation will take some time to be stable but if further this continues then may leads to alleviate foreclosures of property. As RealEstateCake a part of Real Estate Sector , this article is very valuable to understand the market situation during pandemic.
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