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Are you one of the thousands of tenants struggling with rent arrears?

The country is slowly reopening from lockdown, but further problems loom on the horizon. Thousands of tenants are struggling with rent due to job losses and rising rents, while the Government ban on evictions comes to an end at the end of May.

Krista Lomu
· 4 min read

Thousands of tenants in the UK are behind with their rent. Problems in making rent payments is a new struggle for many and a result of the Covid-19 pandemic. While the Government took steps to prevent evictions early into the pandemic, charities are warning the situation could worsen with the eviction ban now ending.

The Government first introduced the moratorium on evictions in England and Wales in March 2020. Landlords weren't allowed to evict tenants who fell behind in rent payments due to Covid-19 related job losses or being on furlough. The ban was needed, as Citizen’s Advice reporting showed one in nine people falling behind on household bills. There have been several extensions to the ban in the past year. However, as it stands, the eviction ban is 100% coming to an end at the end of the month.

January's Citizen's Advice report shows around half a million private-sector renters behind with rent, with average arrears of around £730. Research by LSE London highlighted similar figures. According to the report, over 400,000 private tenants could have significant rent arrears by the end of 2021.

Charities and a group of MPs are asking the Government to take action. The housing committee has recommended extra funding for local authorities to help make discretionary payments to those in arrears. The fear is the end of the eviction ban will lead to increases in homelessness. So far, the Government hasn’t announced any new measures concerning evictions. Last year, they announced an increase in local housing allowance and £140m in funding for councils to distribute in 2021-22. In the most recent move, the Government also announced changes to Debt Relief Orders. From 29th June, the limit for when you can apply for a DRO goes up from £20,000 to £30,000 owed.

Job losses and furlough creating problems

For most people, problems with rent are down to the uncertainty in income streams. According to ONS data, unemployment rates increased last year, with the number of employees falling by 693,000 since the start of the pandemic. Much of the UK workforce was furloughed, which meant the Government helped pay part of the salary. However, furlough salaries still meant a deduction to monthly pay for many. Struggling tenants also tend to be in insecure jobs or working on zero-hour contracts.

Differences in the cost of renting

Another reason behind payment problems has been the hike in rental prices. According to property portal Zoopla, the pandemic has pushed rent prices up, with the average cost of renting a home in the UK outside London increasing by 3% year-on-year. Rents are now rising as lockdown rules are easing.

However, rent hikes have not been universal. Zoopla’s research shows rental costs in major big cities decreasing. In London, the average cost of renting has fallen by 9.4%. The cost of renting also went down in Edinburgh and Manchester, but demand in the cities is now growing, pushing up the prices once more.

While the economy is starting to open up and create more job opportunities, problems with rent payments can have longer-lasting consequences. Aside from the immediate threat of losing your home, payment problems can cause significant financial issues. Household debt has increased, and the presence of defaults and other adverse credit events on your credit file could make it harder to rent a new home.

People facing rent arrears should contact their local council or talk to debt charities offering free help. You can also find tips on maintaining financial security here.

Krista Lomu

Krista Lomu

Krista has been writing about finance for nearly a decade. Based in London, she hopes to turn even the most complicated topics to approachable and interesting for readers. When she's not writing and working with small businesses, she likes to read, watch football and play games - fuelled on by many cups of coffee!
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