Covid-19
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Housing

Getting ahead on falling behind

Tackling the UK’s building arrears crisis

Lindsay Judge
Lindsay Judge

This briefing note examines how families have managed their housing costs over the Covid-19 period. Although the Government has done much to support families over the past year (not least via the furlough scheme and the £20 per week uplift to UC), it is clear that financial strain has grown as the pandemic has worn on. Using new data from a representative survey of UK working-age adults, we show that housing arrears have grown steadily over the crisis, and that renters are at the sharp end when it comes to housing cost pressures.

2021 may look set to be brighter year, but the stock of housing debt that has built up over the pandemic will not resolve itself. We identify a clear and continuing role for policy in supporting incomes directly to avoid the situation getting worse. But alongside this, action is also required to mediate effectively between those who owe and are owed, and to help families reduce their housing arrears via both grants and loans.

Key findings

  • 9 per cent of families in the social rented sector were behind with their housing payments in January 2021, alongside 6 per cent of those renting privately and 2 per cent of mortgaged home owners.
  • These percentages translate into significant numbers: over 750,000 families were behind with their housing payments in January 2021, 300,000 of which contained dependent children.
  • Close to one-quarter (24 per cent) of private renters have seen their earnings fall during the last ten months, compared to one-in-six (16 per cent) working-age adults with a mortgage.
  • Our survey shows that twice as many privately-renting families entered the pandemic with no savings compared to mortgaged home owners (22 per cent and 11 per cent respectively).
  • Despite widespread calls for forbearance in the face of the Covid-19 shock, 3 per cent of private renting families have been able to negotiate a lower rent over the last ten months (a further 5 per cent have been refused), compared to one-in-ten (10 per cent) families with a mortgage who have received a mortgage holiday.
  • More than half (56 per cent) of private renter families with arrears are not in receipt of benefits, leaving them ineligible for a Discretionary Housing Payment.

Recommendations

  • Continue to support those on the lowest incomes by retaining the UC uplift of £20 per week beyond the end of March 2021.
  • Fund the Discretionary Housing Payment budget to at least the same level as 2020-21, and recognising the exceptional circumstances of the last year, allow councils to roll-over any DHP underspend to 2021-22.
  • Follow the example of Scotland and Wales and introduce a tenant loan scheme in England for those who have built up housing debt over the pandemic period.
  • Introduce a pre-action protocol for private landlords requiring them to take robust action to negotiate a repayment plan with indebted tenants before proceeding to court.

Further reading

Building blocks
Assessing the role of planning reform in meeting the Government’s housing targets
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Camron Aref-Adib, Jonathan Marshall, Cara Pacitti
Housing Outlook Q2 2024
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Felicia Odamtten
Home truths
Putting housing policy in context for the 2024 general election
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Camron Aref-Adib, Lindsay Judge, Felicia Odamtten, Cara Pacitti
Lindsay Judge
Lindsay Judge Research Director