Millions of pounds going unpaid in rent arrears

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collection of rent arrears

is is now estimated that over Half a million private renters in the UK are behind on their rent. This information is according to new analysis by Citizens Advice.

With a temporary ban on evictions due to expire this weekend,  the news comes as the country enters another period of national lockdown. The new lockdown is causing further economic hardship the charity reports.

Private Renters have already been affected by the economic consequences of the pandemic with one in three private renters reportedly having a reduced income.

For the majority struggling with their rent, this is a new challenge – 58% of those behind on rent had no rent arrears in February 2020. For people already struggling with rent before the pandemic hit, their arrears have got worse for 40% of them.

On average, people who have fallen behind on rent now owe £730, which would mean around £360 million is owed across the country. Mortgage payers have been able to benefit from formal payment holidays, but renters have been forced to fall back on negotiating month-by-month with their landlords.

The temporary ban on bailiffs enforcing evictions in Tiers 2, 3 and 4 ends on Monday (11th January) and Citizens Advice is warning that, without further help for renters, an avalanche of evictions could take place in the spring.

A quarter of those the charity surveyed who have rent arrears have already been threatened with eviction, termination of their rental contract, or handed an eviction notice despite the current rules.

Citizens Advice is calling for:

  • A legal ban on bailiff action and pause on all possession proceedings during the national lockdown in England and in tiers 2 and above beyond 11 January
  • Targeted financial support for people in England who’ve built up rent arrears. The government should consider a system of grants and government-backed loans – comparable to schemes in Scotland and Wales – to help people pay back their rent arrears sustainably and stay in their homes.

Citizens Advice Coventry case worker, Lauren Brown, said “We’re seeing an increasing number of people come to us for help with rent arrears. This includes people who only six months ago had a well-paid job but were made redundant due to the pandemic and are finding it very difficult to find a job on a similar level.”

“In some cases, they have built up arrears despite having sought and followed advice to claim the correct benefits and reduce expenses. When this hasn’t been enough they have then had to go on to sell their phone and other belongings – or even gone without food – in an attempt to keep up payments on their rent and other bills.’

“If the eviction ban ends, for some families this will mean going from having a home, to living out of a bag. They’ll have to start their lives all over again – all due to an unprecedented situation that was totally out of their control.”

Alistair Cromwell, current Chief Executive of Citizens Advice, said “As coronavirus restrictions once again tighten for everyone, the government must not forget the struggles of private renters. They currently face the prospect of losing their home once the eviction ban ends next week and the debt they have built up is likely to cast a long shadow over their future.”

“Half a million private renters remain behind on their rent, with the majority falling behind during the pandemic restrictions. Unlike people who own their homes, private tenants have had no structured way to defer payments but instead have had to try to keep up with their rent and bills as best they can in a time of great uncertainty and hardship.”

“Even though many landlords are trying their best to support their tenants, thousands of renters could face eviction in the coming months without further help. The government must act decisively to prevent evictions in areas subject to the highest coronavirus restrictions. And they should provide targeted support to help people escape the trap of rent arrears in the New Year.”

Many Private landlords are also facing financial hardship with many behind on mortgage payments. There are no winners in this situation with mass financial hardship being caused on all sides.

Industry commentators have predicted a tidal wave of Debt Collection activity for the collection of unpaid rent arrears in the coming year.

 

Update: The government has now expanded the ban on evictions for a further 6 weeks https://www.bbc.co.uk/news/business-55586081

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