A new report calling for the development of tenant hardship loans for renters in England impacted by the Covid-19 pandemic has been published by the Resolution Foundation.

More than 750,000 families are currently in arrears with their housing payments, and over half – 450,000 – of these families are likely to have fallen behind as a direct result of the Covid-19 crisis, according to the report.

Getting ahead on falling behind – supported by the Health Foundation – examines the impact of the crisis on how families have managed their housing costs over the past ten months.

It found that 300,000 of the total number of families in arrears also include dependent children, suggesting they are especially vulnerable.

The report notes that the UK’s jobs crisis is driving this disparity across housing tenure, with almost a quarter – 24% – of private renters having seen their earnings fall during Covid-19 crisis, compared to one-in-six (16%) of working age adults with a mortgage.

Another factor is that over the course of the pandemic, 10% of families with a mortgage have received a mortgage holiday from their provider, giving them some much-needed respite.

In contrast, 3% of private renters and 2% of social renters successfully negotiated rent reductions over the pandemic period.

But the report fails to point out that while some renters received rent reductions, homeowners still have to pay their mortgage in full.

Support for some renters in need has come via the temporary boost to Local Housing Allowance introduced last April, and Discretionary Housing Payments (DHP).

However, the report shows that DHPs are not reaching a large number of those with arrears. More than half of private renter families with arrears are not currently in receipt of Universal Credit or housing benefit, and are therefore ineligible for payments.

Without further government intervention however, it warns that the rent arrears crisis will worsen in the months ahead – leading to an increased number of court possessions proceedings, which tend to be lengthy, difficult, and upsetting for tenants and landlords alike.

The Foundation says the government should introduce pre-emptive measures to help those most at risk from rent arrears. Policies should include boosting the DHP system, so that it can reach more families in need, and introducing a tenant loan system for England, through which the government would directly support families behind on their housing payments.

The aim is to ultimately offer renters facing financial hardship some much-needed breathing space across the next year, ease the pressure on the courts and landlords, and prevent an arrears crisis from holding back the UK’s slow economic recovery even further, says the Foundation.

Lindsay Judge, research director at the Resolution Foundation, commented: “The UK is currently experiencing a mounting arrears crisis, with more than 450,000 families having fallen behind on housing payments as a result of the pandemic.

“Renters have been particularly badly hit. Many have taken huge hits to their earnings and have limited savings to fall back on. To make matters worse, measures that could ease the pressure, such as Discretionary Housing Payments from local authorities and negotiated rent reductions from landlords, are not getting through to those that need them.

“This situation will worsen without significant government intervention. Ministers must take action by boosting the DHP system, and introducing a UK-wide tenant loan system, to ease the pressure on tenants, landlords and the courts.”

The National Residential Landlords Association, (NRLA) has welcomed today’s report by the Resolution Foundation.

Meera Chindooroy, deputy policy director for the NRLA, said: “We welcome today’s report which agrees with the need for tenant hardship loans to tackle the rent debt crisis we now face. Simply banning repossessions is doing nothing to address this underlying problem which renters and landlords are struggling to cope with.

“The chancellor needs to develop an urgent financial package as called for by the Resolution Foundation to pay off arrears built since lockdown measures started last year. Only this will sustain tenancies and prevent renters facing the consequences of damaged credit scores.”

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