Up to 2.3 million tenants to default on their rent during crisis, says charity

Shelter says its research among renters indicates that a quarter of tenants or 2.3 million people will lose their jobs and be unable to pay their rent over the next three months.
A quarter of renters say they expect to lose their jobs over the next three months as the jobs market contracts during the downturn caused by the Coronavirus, a leading charity has claimed.

The research by Shelter also reveals that these people will be unable to pay their rent if they lose their jobs, indicating just how precarious many low income renters’ personal finances are.

Worryingly for landlords, the research also indicates that up to 2.3 million are likely to join benefits system as they turn to the government to pay their rent, and that the creaking Universal Credits system will not be able cope.

Nearly a million extra people have already begun claiming Universal Credit since the Coronavirus crisis began, a tenfold increase compared to normal times.

Shelter points out that the gap between the housing element of Universal Credit and the rents that tenants pay in many areas of the UK will mean landlords will have little choice but to accept lower rent payments as tenants struggle to pay the shortfall.

Lowest third
The housing element only covers the lowest third of market rents in an area, meaning for families in a two-bedroom home, the shortfall is as high as £400 a month outside of London, and up to £1,227 in the capital.

Shelter is calling on the government to increase housing benefit payments so they cover the average cost of local rents. It says this emergency measure is essential to help tenants and landlords through the financial shock caused by the virus.

Polly Neate, chief executive at Shelter, said: “We’re facing an onslaught of people suddenly unable to afford their rent, at a time when people need to stay put and cannot safely move to a cheaper home.

“To avoid spiralling debt and needless evictions once the ban lifts, the government must increase the housing element of Universal Credit so that it covers the average cost of local rents.”

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