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£360million Covid rent debt crisis will escalate unless Universal Credit cut is reversed, StepChange warns

17 September, 2021

A £360 million wall of rent debt built up during the pandemic combined with cuts to Universal Credit threatens to leave hundreds of thousands of tenants facing long-term housing insecurity and problem debt, according to StepChange analysis of new YouGov polling [see notes to eds 1 and 2].

Since March 2020, StepChange’s research has revealed a tale of two pandemics, with renters one of the groups most likely to have faced a prolonged loss of income or experienced a negative financial impact [see notes to eds 3]. Around half a million private tenants are now battling to stay on top of £360 million rent arrears.

The polling shows how the Government’s planned £20 per week cut to Universal Credit threatens to escalate entrenched difficulties caused by the crisis and exacerbate a two-speed recovery.

The charity’s research shows 558,000 Universal Credit claimants in Covid rent arrears – including private and social renters – say the planned cut means they will struggle to pay existing rent debts over the next 12 months. [see notes to eds 4].

Despite the reopening of the economy, StepChange’s polling shows how rent debt levels have not budged over the past nine months [see notes to eds 5] and threaten to escalate as Covid support is withdrawn. 225,000 private renters now expect to lose their homes due to not being able to keep up with rents and many see no way out of entrenched pandemic-related difficulties [see notes to eds 6].

StepChange is warning that unless the Government changes tack on Universal Credit and delivers an urgent package of targeted support, many private renters face long-term housing insecurity, and prolonged debt harm. This includes the threat of court action, long-term housing insecurity, homelessness and eviction.

Sue, 61, from Essex has rent arrears of £2,000:

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.

"My Universal Credit goes down by £86 per month from October – I don’t know what I’m going to do then. I am trying my hardest to get a job. I just hope that I can stay in my home in the meantime."

The charity’s research points to both the deepening and widening of difficulties from the £20 per week cut. StepChange found 4.3 million people expect to carry on with a claim over the next twelve months, 1.3 million more than were on the benefit in March 2020, with reduced support [see notes to eds 7].

The research shows that while some renters are optimistic about recovery, with a quarter (24%) expecting to find more work in the next 12 months, for many in entrenched debts, work will not necessarily avert financial difficulties.

One in ten in-work renters in arrears expect to be evicted from their homes as a result of these arrears in the next twelve months, showing that targeted support remains essential to stop the looming shadow of serious debt harm.

Nadia, 52, works for a travel company and has £2,000 of rent arrears:

"I’ve been furloughed twice so far during the pandemic because of the travel restrictions. My husband works in car manufacturing, he was made redundant 3 times last year. We rent from a private landlord who has repeatedly threatened to ask us to leave despite the lockdown restrictions.

"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. I’m back at work, but still on furlough pay till end of September and I’m not sure what’s going on after that."

StepChange has been leading calls during the pandemic for the Government to provide an emergency financial support package to help renters worst affected. Such a scheme, as in Wales and Scotland [see notes to eds 8] would help renters to safely wind down Covid-related rent arrears and ensure help for renters to keep their homes.

The charity is also urging the Government not to cut £20 a week from Universal Credit and ensure renters and other low-income households get the financial support they need to sustain tenancies and keep up with essential costs. This would help to reduce the long-term cost to public services like housing, health and mental health that would otherwise be inevitable – and help to offset some of the annual £8.3bn cost of problem debt to the economy [see notes to eds 9].

Phil Andrew, Chief Executive of StepChange Debt Charity, said:

"For 18 months, renters have been at the sharp end of the pandemic. Sadly these figures show a huge number of people worried about how they will keep up with their rent. While the end of restrictions will allow some get back to their feet, thousands are still facing a mountain of rent debt they are unable to address alone.

"The Government’s own research shows that private renters have been hardest hit by the pandemic, and that numbers in rent arrears have more than doubled since March 2020. 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."

Notes to Editors

To arrange interviews with Sue or Nadia, or for further spokesperson comment, please contact the StepChange press team on 0207 391 4598.

  1. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 8,613 adults. Fieldwork was undertaken between 27th August - 1st September 2021. The survey was carried out online. The figures have been weighted and are representative of all UK adults (aged 18+). StepChange has extrapolated national figures from this data by using 2020 mid-year population estimates from the Office of National Statistics which indicate that there are 52,890,044 adults in the United Kingdom.
  2. £360 million of rent arrears: Private renters behind on rent reported having average arrears of £796.45. Multiplying £796.45 by 450,000 (10% of private renters in arrears) we get £358,402,439.
  3. Previous polling showed that half of private renters have suffered a hit to their incomes due to covid leaving them particularly vulnerable to financial difficulty.
  4. 558,000 UC claimants in rent arrears will struggle. Polling by YouGov shows 69% of Universal Credit claimants are renters (equivalent to 4.1 million adults). Polling shows 22% of UC renters are in arrears (equivalent to 900,000 adults). 62% of those UC renters in arrears (558,000) say they’re already struggling to pay rent arrears or will struggle due to the removal of the £20 uplift to Universal Credit.
  5. New Year, Same Arrears: How the pandemic is leaving private renters with unmanageable debt, Citizens Advice (Jan, 2021). Polling in November 2020 using the same methodology also showed £360million of private rent arrears.
  6. 450,000 private renters in arrears: the ONS says there are 4.5 million private rented households in the UK. Our polling estimates that 10% of private renters are in arrears, and 5% of private renters (225,000) say that rent debts built up during Covid mean they will ‘probably’ or ‘almost certainly’ lose their home.
  7. 4.3million: Figure is based on DWP benefits statistics: August 2021, which suggest 5.9 million UK adults are in receipt of Universal Credit. Polling shows 73% of adults in receipt of Universal Credit expect to continue a claim over the next 12 months.
  8. New £10 million grant scheme to help people struggling to pay their rent during the pandemic - Welsh Government (June 2021). ‘Protecting tenants during pandemic’, Scottish Government (June 2021). The more generous tenancy saver grants replace tenancy saver loan schemes both Governments put in place earlier in the pandemic.
  9. Cutting the social cost of problem debt, StepChange Debt Charity (2014)
  10. ‘English Housing Survey: Household Resilience Study, Wave 2 November-December 2020’, Ministry of Housing, Communities & Local Government (April 2021). These official figures show 9% of private renters in arrears in Nov-Dec 2020, up from 3% in 2019-20.

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