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Coronavirus: Renters 'may struggle to pay' as furlough scheme cut back

Tom Belger
·Finance and policy reporter
·4-min read
EMBARGOED TO 0001 MONDAY APRIL 27 File photo dated 08/02/17 of a row of To Let estate agent signs placed outside houses in north London. Seven in 10 renters whose tenancies were up for renewal stayed put in March, the highest proportion for that time of year since 2008, according to an index.
Landlords fear furlough cuts will leave tenants struggling to pay rent. Photo: PA

UK landlords are warning of a “serious danger” that many young renters will struggle to pay their rent as the furlough scheme is wound down.

The National Residential Landlords Association (NRLA) issued a joint statement with two of Britain’s leading homelessness charities Crisis and Centrepoint sounding the alarm on Tuesday.

A survey by the NRLA shows around a quarter of young private renters have been furloughed, and have taken a greater hit to average incomes than older age groups.

With employers expected to cover more costs for furloughed workers from August, there are widespread fears of increased lay-offs. “As the furlough scheme is wound down, many young renters would struggle to afford their rents where they are reliant solely on benefits,” the NRLA said in a statement.

READ MORE: Coronavirus: Furlough scheme caps out at 9.4 million people

New figures published by the Treasury on Tuesday show that 9.4 million people were on the government’s job retention scheme as of 5 July, up from 9.3 million on 28 June.

Some 33 million people were in work at the start of this year, according to the Office for National Statistics, meaning over a quarter of the entire working population has been placed on furlough. The scheme, which is due to run until the end of October, has so far cost the UK taxpayer £27.4bn ($34.2bn).

In early June, a ban on landlords evicting renters was also extended by two months as part of continued emergency coronavirus measures. Housing secretary Robert Jenrick said it would benefit "millions of renters.”

New evictions from social or private rented accommodation in England and Wales are suspended until 23 August. The original legislation, which began in March, was due to expire on 25 June.

Ahead of chancellor Rishi Sunak’s summer statement on Wednesday, the three organisations are now calling on the UK government to “boost the safety net” for renters with three new reforms.

READ MORE: UK house prices fall for a fourth month in a row

They want to see a suspension of the benefit cap, a limit on total household benefits introduced by former chancellor George Osborne. It is reported to have already prevented some households from receiving greater support during the crisis when the government recently increased housing benefits.

Another demand is to tackle the controversial five-week wait before new universal credit claimants receive any cash. The government introduced advance loans to bridge the gap, but the charities and landlords’ body say debt should not be “baked into the system” and it should become a grant.

Their third demand is giving “serious consideration” to scrapping the cap on rent support for low-income renters under 35. Exemptions should at least be introduced for young rough sleepers, care leavers up to 25, and victims of domestic abuse and human trafficking, according to the groups.

READ MORE: UK firms paid to hire young staff in ‘biggest ever’ traineeship boost

“Young renters have borne the brunt of the COVID crisis,” said Ben Beadle, chief executive of the NRLA. “Many have relied on the furlough scheme to enable them to pay their rent. As this support reduces there is a serious danger that they will struggle to meet their payments.”

Jon Sparkes, chief executive of Crisis, added: “We know that across the country thousands of young people are bracing themselves for the anxious months ahead as they struggle to pay high rents on reduced hours and low wages. This is set to become all the worse when the eviction ban comes to an end next month.”

A government spokesperson said it had taken “unprecedented action” to support renters and prevent financial hardship.

“We have introduced the furlough scheme to protect jobs, provided over £6.5bn to strengthen the welfare safety net, and introduced higher local housing allowance rates,” he said.

“We have also provided protections to renters that have meant no-one has been forced from their home as a result of the pandemic.”

He also said the government was working with the judiciary to provide “appropriate protection” to people suffering because of the crisis when proceedings resume.