600,000 households with children worried about paying their rent over winter

@JRF_uk  say 2.5 million households are worried about paying rent over winter, with 700,000 already in arrears and 350,000 at risk of eviction 

A large-scale survey of private and social renters in Great Britain reveals:

• Around 2.5 million households are worried about paying their rent over the winter and 700,000 are already in arrears with their rent payments
• JRF estimates that arrears could already total £400m in England & Wales
• 350,000 households have already either been served an eviction notice or been spoken to about eviction by their landlord
• High proportions of renters who’ve reduced spending to offset a fall in income since March are cutting back on essentials like food (70%), heating and electricity (49%), and for renters with children, food for children and nappies (39%)
• JRF is calling for a watertight ban on evictions, together with targeted support for rent arrears to prevent a surge of evictions in the spring

Protections put in place at the start of the pandemic are not working for large numbers of renters. Renters on lower incomes are being hit hardest, and many are using up their limited savings, cutting back on essentials and borrowing money to stay afloat.

Despite this, many households are building up unmanageable amounts of rent arrears, and some are being threatened with eviction. Black, Asian and minority ethnic renters are disproportionately likely to be concerned about paying their rent over the winter.

The Joseph Rowntree Foundation (JRF) is warning that without immediate targeted support, renters who have seen their incomes drop will be at risk of real hardship this winter and may lose their homes.

JRF is urging the Government to reinstate a watertight eviction ban to prevent a wave of homelessness this winter. Despite government guidance not to employ the use of bailiffs before 11 January in England, this protection may not be legally binding and may not be well understood by households vulnerable to eviction, who may feel they have no option but to leave their home if they receive an eviction notice. The Government is also considering excluding people with arrears from prior to Covid-19, a highly financially vulnerable group. 

JRF recommends a targeted grant programme designed to address rent arrears, along with guidance for councils to make sure the support reaches people who need it most and that any temporary protection from eviction does not simply delay problems until the spring. This would provide immediate relief for renters, preventing the build-up of problematic levels of debt and allowing them to stay in their homes as the country continues to weather the coronavirus storm.

Helen Barnard, Director at JRF said:

“Millions of people are anxious about paying the rent over winter, having run down their limited savings, reduced their spending and borrowed from friends, family or the bank. The worrying number of households already in arrears shows renters are running out of options. Without action we could see a wave of evictions and a surge in homelessness over the winter.

“The Government acted swiftly during the first wave of the pandemic to ensure no one would be forced from their home, rightly recognizing that we all want to protect one another from harm during this crisis. Bringing back a watertight ban on evictions now is the right thing to do.

“But without action which seeks to address growing arrears, any ban on eviction or enforcement only kicks the can down the road, with renters vulnerable to losing their homes again as restrictions are lifted. A targeted package of support to address high rent arrears will give renters and landlords much needed breathing space as we continue to weather the storm.”

An estimated 1.3million households in the private sector (30%), and 1.2 million households in the social sector (27%) are worried about paying their rent over the next three months. Social rented tenancies are generally the cheapest tenure, so it is concerning that so many social tenants are worried about meeting their housing costs. Families with children that rent privately are more likely to be worried than other households, with four in ten, approximately 600,000 households, worried about paying their rent over winter.

While the recent extension of the original furlough scheme will have mitigated some level of risk for some people, for many its announcement will have come too late, with recent ONS data showing redundancies reaching a record high of 314,000 in the last quarter.

People who have experienced or expect a drop in income, people who are already unemployed and those on lower incomes are being hit hardest. 61% of all renter households where someone is facing a drop in income in November and 62% of renter households where someone is unemployed are worried about this. 38% of private renters with a household income below £25,000 are worried about paying their rent over the next three months, and this rises to a stark 70% for households at this income level who are expecting a drop in income.

Renters are using multiple strategies to try to stay afloat. 41% of private renters and 34% of social renters who have seen a drop in income have used their savings to offset this, but levels of savings among these groups is not high, with one in four private renters (42%) and two-thirds of social renters (65%) in the UK having  savings of less than £500.1 Across all renting households who reduced their spending to offset a loss in income, 70% cut back on food for the household, and 49% cut back on heating and electricity. 39% of renters with children who have reduced spending have cut back on items for children such as food and nappies. As we head into winter and continue to feel the economic impact of lockdown measures, renters may find themselves in real hardship, left with fewer options when it comes to paying the rent, heating their homes and feeding their families. 

700,000 renters are currently in arrears with their rent and 1.7m (19%) are in arrears with household bills or council tax payments. Approximately 80,000 households in the private sector and 125,000 households in the social sector have arrears of more than £1,000. JRF estimates the current total household arrears runs into the hundreds of millions, with £400m of arrears in England and Wales as a conservative estimate. 42% of private renters who are already in arrears have borrowed from either a bank or building society, payday lender, or friends and family.

350,000 renting households have had their landlord discuss eviction with them – 4% of all renters.  Unlike the eviction ban that was in place between 31 March to 20 September in England and Wales, the current arrangements do not put a stop to proceedings, and cases will still be heard in court.

The research also found that black and minority ethnic renters are disproportionally worried about their ability to pay their rent over the winter period – 42% people in this group, compared to 27% of white renters in this position.

The briefing paper, Struggling renters need a lifeline this winter, is available on request from JRF.

All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 10,719 adults, of which 2,989 were renters. Fieldwork was undertaken between 20 – 27 October 2020. The survey was carried out online. The figures have been weighted and are representative of all Great Britain adults (aged 18+).

Calculations of the number of households were made by combining polling data with figures from the Annual Population Survey 2019. 

At the end of October (31 Oct) 1.6 million households worried were about payments over winter 

Research painted a picture of growing financial insecurity among mortgage-holders, and a lack of resilience to further economic shocks, particularly among households on lower incomes. As the mortgage holiday scheme closed at the end of October, many homeowners faced a cliff-edge.

JRF warned that the benefit designed to help with mortgage costs will exclude many of the people who will need it most as unemployment continues to rise.

Support for Mortgage Interest (SMI), the government loan for people who cannot pay their mortgage, is only available to those receiving Universal Credit and not earning any other income. If someone in the household earns as little as £1 on top of Universal Credit, they are not eligible. This means anyone who has been furloughed, accessed the Job Support Scheme or had their hours cut is excluded. Out of the 890,000 mortgage-holding households that are in work but expecting a reduction of income in the next month, 750,000 (85%) are excluded from SMI for this reason.

Secondly, SMI is not available until a household has been out of work and without income for nine consecutive months. This means an eligible household that applied at the start of lockdown would not receive any support until December. Those applying now would not get any support until July 2021, a wait time that will leave many households building up unmanageable arrears.

JRF is calling on the Government to ease the zero-earnings restriction to allow people to claim SMI while moving into work, in line with other benefits, and to reduce the wait time to three months. JRF also recommends the SMI payment is reverted to a grant rather than a loan, or at the very least converted to an interest-free loan, so that people who are already struggling are not hit with the additional cost of interest.

Darren Baxter, Policy & Partnerships Manager at JRF said:

“It’s not right that during a time of huge uncertainty, many households whose incomes are being eroded by the coronavirus storm are discovering that they are excluded from the only lifeline that could help meet their housing costs.

“Already we are seeing an unsustainable pattern of borrowing, using up savings and cutting back on essentials. As the mortgage holiday scheme closes and we head further into an unemployment crisis that has yet to peak, there is a real risk that mortgage-holders on low incomes will be pulled into poverty and hardship. Those that do qualify for support must wait until summer 2021 to access it, which puts an unacceptable level of stress on households whose options are already running out as we head towards Christmas.

“The Government can provide effective support to this group by making sure the Support for Mortgage Interest policy works in harmony with the other vital measures it has put in place since the start of the pandemic. Removing the zero-earnings rule, reducing the wait time to three months, and considering making the scheme a grant or an interest-free loan would provide much-needed breathing space for households whose incomes are reduced during this time.”

The survey of 3,008 mortgage-holders, commissioned by JRF and conducted by YouGov between 20-27th October, found that one in three (37%) households on incomes of £25,000 or less are worried about paying their mortgage over the next three months. This rises to almost half (45%) for mortgage-holders who are unemployed.

Those on higher incomes, though far from immune to experiencing a sudden drop in income, are more likely to have a cushion of savings to fall back on. But even before coronavirus hit, one in three households in poverty were homeowners,² and more than 20% of mortgage-holders have less than £1500 in savings,³ so this is not a sustainable option for many people whose incomes take a hit. 

210,000 households are already in arrears with their mortgage payments. A third of those in arrears have borrowed money, with many turning to family or friends, and others relying on bank loans or payday lenders.

The mortgage holiday policy was a key protection for households whose incomes were hit by Covid-19, with more than two million granted since the scheme came into effect. Half (52%) of the households surveyed that are currently in arrears took out a mortgage holiday to protect their finances. Once the scheme closes, lenders are under no obligation to continue offering support, any discretionary support that is provided will now go on customers’ credit files.