Tenant News

End of furlough puts 400,000 more renters at risk of debt

Em Morley - November 3, 2020

More than 340,000 private renters in Great Britain work in sectors at risk of redundancies when the furlough scheme ends, an analysis by Generation Rent has found.

A further 62,000 private renters work in sectors facing closure under Tier 3 restrictions. Generation Rent believes they could see their incomes reduced by a third.

The campaign group warns that this will add to the numbers of people who cannot cover their rent because housing benefit levels are inadequate, putting them at risk of arrears and eviction.

Generation Rent is calling on the Government to increase Local Housing Allowance (LHA) to cover the median rent to prevent families from getting into debt. It also calls for a fund to clear the debts of renters who are already in ‘serious arrears’ by compensating landlords up to 80% of the rent owed. It also believes that fast-tracking the abolition of Section 21 “no fault” evictions will prevent unnecessary hardship now that courts have reopened.

Sectors including nightlife, entertainment, events, and sport face continued restrictions. When the 80% guaranteed furlough ends, many employees may face redundancy or reduced income. Based on Labour Force Survey data, Generation Rent estimates that of the 1.4m employees in these sectors, 341,000 are private renters (24%).

The group points out that a further 62,000 private renters are working across Great Britain in sectors that could face closure under Tier 3 measures, including leisure centres, hairdressers and betting shops.

Generation Rent believes that these 403,000 workers will become more reliant on Universal Credit to pay their rent. However, its analysis of data from the Department for Work and Pensions (DWP) indicates that many will face shortfalls.

The regional findings from this analysis also 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.

Alicia Kennedy, Director of Generation Rent, said: “As the furlough scheme nears its 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.”