More than 340,000 private renters in Great Britain work in sectors at risk of lay-offs when the furlough scheme ends. This will add to the numbers of people who cannot cover their rent because housing benefit levels are inadequate, and are at risk of arrears and eviction.
We are calling on the government to raise Local Housing Allowance to cover the median rent so that families do not get into debt and to set up a fund to clear the debts of renters who have already got into serious arrears by compensating landlords up to 80% of the rent owed. We are also calling for fast-track abolition of Section 21 “no fault” evictions to prevent unnecessary hardship now that courts have reopened.
After a last-minute extension, the Job Retention Scheme will be replaced in December by the Job Support Scheme to pay employees working more than a third of normal hours at least 74% of their wage, and employees in businesses forced to close 67% of their wages (more info).
Even when lockdown ends, sectors including nightlife, entertainment, events and sport face continued restrictions on operations so the end of the 80% guaranteed furlough means many employees face redundancy or reduced income. Based on Labour Force Survey data, we estimate that of 1.4m employees in these sectors, 341,000 are private renters (24%).
There are a further 62,000 private renters working across Great Britain in sectors that could face closure under Tier 3 measures, including leisure centres, hairdressers and betting shops.
With the latest announcement of a second lockdown, the number affected is much higher, but workers will still get 80% of wages. After this period, these 403,000 workers will become more reliant on Universal Credit to pay their rent, but analysis we have done of Department for Work and Pensions data indicates that many will face shortfalls.
Between February and May 2020, 493,000 private renter households started claiming Universal Credit, bringing the total number of private renters relying on state support with their rent to 2.0m households in Great Britain.
Universal Credit includes a housing element based on Local Housing Allowance (LHA). Even with additional support announced by the government in March, the maximum that claimants can receive in LHA can cover rent on only the cheapest 30% of private rented homes in their local area. In May, 39% of the private renter population was receiving LHA – up from 30% pre-pandemic – meaning that, by definition, many will live in homes more expensive than the cheapest 30% and will have to top up their rent with other income, savings or borrowed money. Regional analysis of the figures indicates 474,000 private renter households in Great Britain face a rent shortfall. (The true number is likely higher as many renters in the cheapest properties are ineligible for housing support due to their visa status.)
The regional findings include:
- The number of private renters in London claiming Universal Credit doubled in the first three months of the pandemic (an increase of 100%), followed by 76% in the South East and 72% in East Anglia.
- In North East England, nearly half (49%) of private renters are receiving LHA, meaning 19%, or 37,568 households, are left with a shortfall. Private renters in Wales and the North West are also badly hit, with 46% receiving LHA in May.
- The region facing the least impact is Scotland, which still has 31% of private renters relying on state support, and 1962 households facing a shortfall.
All the figures are available here.
With the furlough scheme coming to an end, people are worrying about how they will keep their heads above water. More than a million employees are at risk of redundancy and a quarter of them are private renters. Thousands of renters started claiming Universal Credit at the start of the pandemic and have found that it is nowhere near enough to cover the rent they owe. Every month their debt piles up. Without additional support for renters, the government will preside over mass impoverishment of millions of people.