An independent think-tank has backed calls for the government to introduce tenant hardship loans for renters impacted by the pandemic, revealing that 450,000 families renting in both private and social housing are behind with their payments.

The Resolution Foundation says that while the Universal Credit uplift of £20 a week and Discretionary Housing Payments (DHP) should be maintained, it also needs to focus on the large numbers of people under housing stress who can’t access financial help.

Its report shows that more than half (56%) of private renter families with arrears aren’t claiming benefits – the passport to the DHP system.

It says: “For this group, a tenant loan scheme, along with requirements on landlords to mediate, would go a long way towards an equitable and efficient resolution of the incipient housing cost crisis.”

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Rent arrears

In January, 9% of families in the social rented sector were behind with their housing payments along with 6% of those renting privately, according to the foundation.

It estimates that the scheme would cost £375 million to operate in England, although it says: “It is fair to expect some quid pro quo from landlords if the state takes on the risk of non-payment of arrears via a tenant loan scheme.”

The report adds: “The time has come for the government to deliver on its promise of a pre-action protocol for private renters and require landlords to take serious steps to negotiate a payment plan with indebted tenants before proceeding to court.”

The National Residential Landlords Association agrees that simply banning repossessions is doing nothing to address underlying problems.

Meera Chindooroy (pictured), deputy policy director, adds: “The chancellor needs to develop an urgent financial package as called for by the Resolution Foundation to pay off arrears built since lockdown measures started last year. Only this will sustain tenancies and prevent renters facing the consequences of damaged credit scores.”

Visit the Resolution Foundation’s website.

2 COMMENTS

  1. It estimates that the scheme would cost £375 million to operate in England, although it says: “It is fair to expect some quid pro quo from landlords if the state takes on the risk of non-payment of arrears via a tenant loan scheme.”
    Why is it fair to expect some quid pro quo from landlords? The debt is nothing to do with landlords’ conduct – it’s tenants not paying their rent. I’m really hoping this isn’t implying that if the gov pays something the landlord is expected to lower the debt.

    It says: “For this group, a tenant loan scheme, along with requirements on landlords to mediate, would go a long way towards an equitable and efficient resolution of the incipient housing cost crisis.”
    I clicked on ‘landlords to mediate’ phrase highlighted in blue in the article. And here’s what I found out
    “Why should I use mediation?

    It’s quick – we can solve disputes within, on average, 5-10 working days.
    It’s easy – the landlord completes an instruction form, and we take care of the rest.
    It’s cost-effective – parts of the process are free, and currently costs that do apply are limited to:
    – £25 inc VAT where the tenant does not want to take part in mediation – we write you a report that can be used at Court

    – £200 inc VAT where the tenant does want to take part in mediation

    It shows you’ve been reasonable by trying to sort things out before going to court.
    Where mediation is successful and agreement is reached you will not need to go to court at all – saving many months’ time, cost, and inconvenience.”

    And, Oh! look! There’s a £200 fee if the tenant doesn’t show up. The mediation process assumes it is instigated by the landlord. Does this mean the tenant can’t instigate it?

    “The report adds: “The time has come for the government to deliver on its promise of a pre-action protocol for private renters and require landlords to take serious steps to negotiate a payment plan with indebted tenants before proceeding to court.” ”
    Can the tenant take serious steps to negotiate a payment plan? Shouldn’t this read “require landlords and tenants to take serious steps…”
    Articles like this where the landlord is always seen as the one to be proactive paints all tenants with the ‘pathetic and incapable’ brush.

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