Will the Vulnerable Renters Package be Enough?

UK Housing Market

The pandemic has left thousands of vulnerable renters in distress as they are struggling to pay their rent. On 23 October, the Department for Levelling Up, Housing and Communities announced that they have put together a £65 million support package to help these vulnerable renters that are low income households.

The government has further stated that this £65 is in addition to the £500 million Household Support Fund – announced in September – that is earmarked for “helping families with essentials over winter,” such as energy and food costs, both of which are rising.

Councils in the UK will receive this money so they can use it to support the almost one million low-income households that are now in rent arrears, with the aim of preventing evictions by landlords.

In addition to rent arrears, the Joseph Rowntree Foundation has said that about 3.8 million low-income households are in arrears with household bills. About 1.4 million people are in arrears on their council tax and the same with gas and electricity bills. About 33% of low earners are in arrears, up from 11% in 2019.

The money is intended to help vulnerable families get back on track as we tentatively exit the worse of the pandemic. Many evictions have been kept at bay by a temporary ban on evictions.

Talking about the extra funding the government is providing to support vulnerable families, the Minister for Rough Sleeping and Housing Eddie Hughes said,

“We have taken action throughout the pandemic to support the most vulnerable families, and it is vital we continue to provide support as we enter the winter months. This new funding will support families that are struggling and help to get them back on their feet as we begin to recover from the COVID-19 pandemic.”

Renters at risk of being evicted due to rent arrears have been urged by the government to contact their local council for support and advice. Money paid to renters in arrears will likely be paid directly to the existing landlord, or if they are looking for a new place, to the new landlord.

The new £65 million vulnerable renters’ grant is an extra fund that has already seen £310 million given to councils in 2021, provided through the Homelessness Prevention Grant. To help prevent evictions, there is also a £140 million available with the Discretionary Housing Payments scheme.

Will the financial support be enough?

Any extra money to help the most vulnerable renters is welcome; the pandemic hit many people hard as they struggled to pay their rent and make ends meet. As businesses were shuttered and people were forced into lockdown, the impact felt by the most vulnerable was severe.

“However, the extra £65 million provided by the government doesn’t go far enough to address the magnitude of the rent arrears problem,” said Jamie Johnson, CEO of FJP Investment. “Helping people with their rent arrears goes beyond helping among the most vulnerable in society that are in private renting, it is also about protecting the UK economy. The government is speaking positively about economic recovery, but an important part of this recovery concerns the housing market, in which many landlords are also in a precarious situation due to rent arrears. ”

Indeed, the magnitude of the problem can be discerned by the fact that rent arrears are currently running at about £360 million, or £440 million by some sources, and rising, almost six times what the government has pledged.

Now that the temporary eviction ban has ended along with the furlough scheme, many families are worried and stressed wondering if they will lose their home. If disaster is to be averted, much more needs to be done to protect both vulnerable low-income households and the private renting sector, a significant part of post-Covid economic recovery.

From a long-term perspective, government help should also focus on continuing government work as found in the Job Retention Scheme. More investment in jobs and training is necessary to help “Build Back Better.” As they say, “Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.” In other words, short-term financial aid is only the start; greater medium and long-term action is vital.

In the wake of the pandemic, as people have returned to work, clearing their rent arrears is next to impossible when many are living so close to the financial edge. Further aggravating the situation, forecasts of price inflation hikes of anywhere between 4–5% on energy, food, and other essentials, are squeezing many low-income households so much that paying arrears seems like a pipe-dream.

Public sector pay

Many public sector workers are living in private rented accommodation. For those hoping to save for a mortgage deposit while dealing with high rents, housing shortages, affordable housing, and price inflation, addressing public sector pay in a genuine way is critical to addressing the UK housing crisis.

The public sector pay increase also recently announced by the government is welcomed after nearly a decade of a freeze, but like the £65 million earmarked for rent arrears, a pay increase that effectively will be wiped out from inflation will do little to help struggling families make ends meet.

When the government announces a lift on the pay freeze, it should be followed by a meaningful increase that can make a real positive contribution to workers who have effectively been paid less and less as purchasing power has eroded in the last decade.

With over 200,000 vacancies in the NHS and other public sector departments struggling to recruit and retain staff, a pay increase that is not just an unfreeze in name only will be needed to boost confidence and morale in the public sector. Pay that falls short of rising above inflation is a slap in the face to the many professionals who work tirelessly on our behalf every day.