Debt crisis ‘engulfing rental market’ in UK, landlords warn

Over 800,000 private renters in England and Wales are in arrears as lockdown measures severely impact their ability to work, landlords have warned.

A survey of tenants for the National Residential Landlords Association (NRLA) suggested that seven per cent of private renters - around 840,000 tenants - have built arrears averaging between £251 and £500 due to the coronavirus pandemic.

Of those in arrears, 18 per cent now have rent debts of more than £1,000 - equivalent to over 150,000 tenants.

The NRLA is calling on the government to introduce a financial package to help struggling renters pay off their debt built since lockdown measures were imposed, in order to “sustain tenancies”.

Young renters are most likely to have been affected by the pandemic, with 14 per cent of renters aged 18 to 24 and 10 per cent of those aged 25 to 34 having built arrears since March, when the crisis began.

Self-employed renters were also most likely to be in debt, with the survey showing 17 per cent of self-employed people said they had developed arrears since March.

People in the West Midlands made up the largest proportion of people who had built rent arrears regionally (11 per cent), followed by tenants living in London (nine per cent).

Ben Beadle, chief executive of the NRLA, said: “Our research highlights in stark terms the rent debt crisis now engulfing the rental market.

“Whilst the vast majority of landlords have done everything possible to support tenants affected due to Covid-19, expecting them to muddle through without further support is hurting tenants as well as landlords.”

He urged ministers to develop an “urgent financial package” to help get rent debts paid off, as “simply banning repossessions does nothing to keep tenants in their homes long term”.

“In fact, it will achieve the complete opposite as in kicking the can down the road, it just means larger debts piling up, creating a bigger problem for tenants and also for landlords,” said Mr Beadle.

The financial package suggested by the NRLA includes a mixture of government-guaranteed, interest-free warship loans and a boost to housing benefits instead of the planned cut Chancellor Rishi Sunak announced in his Spending Review last month.

The Local Housing Allowance (LHA) measure to help tenants on low wages pay their rent will be slashed from the current £1bn to just £345m by 2025-26.

Ministers have also been warned that without “concerted government effort, the number of families and individuals who could become homeless by 2031 could reach over 60,000 in the next ten years.

Homeless charity Crisis published research on Tuesday with the right measures in place, rates of homelessness could be reduced by 25 per cent by 2031 than under current projections.

Such measures could also reduce rough sleeping by up to 62 per cent and unsuitable temporary accomodations by 75 per cent.

“As the economic impact of the pandemic sweeps across Great Britain and with unemployment set to peak in mid-2021, there are fears the post-pandemic economic downturn could see many more forced into dangerous and insecure living situations,” said the charity in a statement.

Jon Sparkes, chief executive of Crisis, said: “Since the start of the pandemic, we’ve seen unprecedented action to protect people experiencing some of the worst forms of homelessness. Today’s figures show how, while we’ve taken steps forward, we’re now at a crucial point where homelessness could either skyrocket over the next decade or can be brought down with similar bold action to what we’ve seen this year.”