Guest blog: Landlords and tenants face cliff edge as furlough ends

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The end of furlough combined with cuts to vital benefits, will leave private landlords and their tenants on a cliff edge.

Renters are already struggling, with the number in arrears tripling from 3% at the end of 2019 to 9% by the end of 2020.

Now, with the Bank of England warning renters are more likely than any other group to have lost their jobs or been furloughed, we are urging the Government not to turn its back on those facing mounting rent debts through no fault of their own.

The NRLA believes tenants already struggling to cope could be pushed to the brink when furlough draws to a close at the end of September, as Universal Credit payments are cut by £20 a week and housing benefit remains frozen.

Threat to the economy

In a new report we examine what we believe is a failure to address the rent debt crisis building in the private rented sector (PRS) despite the best efforts of landlords and look at the potential solutions.

We know that the majority of tenants want to pay their rent, with 82% of those in debt paying their rent on time and in full prior to the pandemic.

We also know, from our own research, that many of our members have gone above and beyond to help support tenants to remain in their homes during the pandemic.

However, with a high proportion of landlords reliant on rent payments as their own and sometimes only source of income, there is a limit to how long this can continue.

The Government has admitted many landlords “are highly vulnerable to rent arrears”, and we argue landlords cannot be expected simply to continue to absorb these debts.

The figures speak for themselves, with data from MHCLG’s English Private Landlord Survey showing:

• 94% of private landlords rent property out as an individual
• 45% of private landlords rent out just one property
• 44% of private landlords became one to contribute to a pension

And it isn’t just us.

The Bank of England has also flagged the rent debt crisis as a major risk. It said Covid-related arrears could be a threat to the country’s economic recovery and has raised concerns about the impact rent-related debt will have on tenants’ credit scores and their ability to remain in their homes.

What needs to change?

To counter this the NRLA is calling on the Chancellor to develop an interest free, Government guaranteed hardship loan to support the majority of tenants with Covid-related rent debts who are not eligible for benefit support.

This scheme would help these tenants to pay off their rent debts and would follow the introduction of similar schemes in Scotland and Wales.

We are also one of 100 industry organisations to sign a letter calling on the Government to scrap plans to cut Universal Credit payments to avoid potentially devastating consequences for tenants across the country.

Doing nothing is not an option

If ministers continue to ignore the plight of private landlords and tenants the consequences could be both serious and expensive for Government, which will be left footing the bill for rehousing those who can no-longer pay their rent or make up arrears.

The knock-on effect for these tenants is far reaching. They could not only lose their home, but struggle to privately rent a home in future – or get a mortgage – due to the damage to their credit score.

 There is also the immeasurable harm to mental and physical health, and the pressure that places on already stretched health services.

By ending furlough and cutting benefits in quick succession, and without the introduction of a targeted package to tackle Covid-related rent debt, the Government is worsening an already critical situation.

Without transitional support the Chancellor will be turning his back on those renters and landlords that are in such desperate need of his help.

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