Estimated £360m Covid rent debt crisis will escalate, warns charity

A £360 million “wall” of rental debt built during the coronavirus crisis is set to get worse amid imminent Universal Credit cuts, a charity is warning.

About half a million private tenants are now trying to stay on top of £360 million in rent arrears across the UK, according to calculations from StepChange Debt Charity.

Private renters in arrears said they were behind by just under £800 on average.

The charity said a planned £20-per-week cut to Universal Credit will escalate entrenched difficulties.

It highlighted the case of a 61-year-old from Essex in £2,000-worth of rent arrears, who said: “I have recently managed to get some help from the council regarding my rent and am just about managing to pay it in full, but I’m still not really able to pay anything towards the arrears.

“Luckily the landlord seems fine with this at the moment, but obviously that could change at any time.”

StepChange’s research suggests around one in 10 renters who are in work expect to be evicted from their homes as a result of their debts within the next 12 months.

In another case, a woman who works for a travel company and is in £2,000 of rent arrears told StepChange: “My husband is suffering with long Covid and although he is at work, the stress of not hitting his targets is really affecting his mental health.

“He is just about earning enough to pay the rent, but not enough to be able to contribute towards the arrears.”

Phil Andrew, chief executive of StepChange, said: “Covid support schemes, while a lifeline for many, haven’t been able to help renters address their arrears and with cuts to Universal Credit and the end of furlough imminent, there is a real danger of thousands losing their homes.

“That’s why StepChange is calling for a dedicated financial support to help ensure renters can safely wind down Covid rent debts and keep their homes.

“By establishing a dedicated rent debt fund, and by scrapping the planned Universal Credit cut, the Government can avert the threat of a rise in evictions, problem debt and homelessness that will compound financial and social problems and hamper economic recovery.”

More than 8,600 people were questioned as part of the research.

Chris Norris, policy director for the National Residential Landlords Association, said: “Many tenants and landlords have struggled throughout the pandemic.

“The end of furlough combined with cuts to benefits creates a perfect storm as those affected face the prospect of rent arrears getting worse.

“These are debts that landlords cannot afford to sustain indefinitely. The Chancellor needs urgently to follow the examples set in Scotland and Wales and come forward with transitional support to get Covid-related arrears paid off.”

A Ministry of Housing, Communities and Local Government spokesperson said: “Our £352 billion support package has helped renters throughout the pandemic and prevented a build-up of rent arrears.

“We also took unprecedented action to help keep people in their homes by extending notice periods and pausing evictions at the height of the pandemic.

“As the economy reopens it is right that these measures are now being lifted. We will bring forward further proposals in due course to create a fairer and more effective private rental sector that works for both landlords and tenants, including the abolition of Section 21 ‘no fault’ evictions and further support for landlords where repossession is necessary.”