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Chancellor urged to tackle UK's rent debt crisis with millions in arrears

Saleha Riaz
·3-min read
Britain's Chancellor of the Exchequer Rishi Sunak speaks at the House of Commons in London, Britain January 11, 2021. UK Parliament/Jessica Taylor/Handout via REUTERS THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY. MANDATORY CREDIT
Britain's Chancellor of the Exchequer Rishi Sunak speaks at the House of Commons in London, Britain January 11, 2021. UK Parliament/Jessica Taylor/Handout via REUTERS THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY. MANDATORY CREDIT

A coalition of landlords, housing groups and charities has warned that the government needs to do more to support renters and avoid them "being scarred" by debts, otherwise more will lose their homes in the coming months, with the risk of an increase in homelessness.

A joint statement by The Big Issue Ride Out Recession Alliance, Citizens Advice, The Mortgage Works, National Residential Landlords Association (NRLA), Nationwide Building Society (NBS.L), and StepChange Debt Charity and Shelter, among others, said that at least half a million private renters are in arrears due to the economic impact of COVID-19.

It said it welcomed measures taken to date by the government, but said chancellor Rishi Sunak should no longer wait to take further action.

It has recommended a targeted financial package to help renters pay off arrears since lockdown measures started in March last year.

“This will help to sustain existing tenancies and keep renters in their homes – whilst also ensuring rental debt does not risk them finding homes in the future,” it said.

Its second suggestion is a welfare system that provides renters with the security of knowing that they can afford their homes.

“The government increased universal credit and housing benefit because it recognised that the system was not doing enough to support people in the first place, yet it has chosen to freeze housing benefit rates again from April and is considering cutting universal credit at the same time,” it noted.

“It cannot be right that these measures could be pulled away from renters during continued economic uncertainty,” the statement said.

The coalition had also said last month the government needs to “get a grip” on the debt crisis.

WATCH: Am I wasting my money by renting?

READ MORE: Coronavirus: 840,000 renters are in arrears

Lockdowns have left many people unable to work, leading to unpaid rental debts. Declining income for landlords has put some at risk of going bust.

A report from December showed more than 800,000 private renters in England and Wales have built rent arrears since lockdown measures began, with average arrears between £251 ($333) and £500.

Market research agency Dynata surveyed 2,077 private renters in England and Wales in November and December this year for the NRLA.

It found that 7% of private renters have built arrears due to COVID-19. That would amount to 840,000 tenants. Worryingly, 11% of private renters are now unemployed.

And it was reported last month that over half of private landlords have lost rental income as a result of the COVID-19 pandemic new research revealed.

Interim findings from the NRLA's survey for the fourth quarter of 2020 showed that 56% of landlords lost rental income as a result of the pandemic, with 12% having lost more than 20% of that income.

Meanwhile, the UK government has once again extended a ban on serving eviction notices across the country until the end of March. It means eviction notices – which could have started again on 22 February – cannot be served for another six weeks.

The government had also extended it last month. At the time, some 43% of UK landlords said the ban should not have been extended, while 76% of tenants welcomed the move.

The ban is only on physically evicting a tenant from a property, meaning that landlords cannot start court proceedings against the tenant. The ban is not on serving section 21 and section 21 notices, which is still permitted.

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