The coronavirus rent crisis – is rent suspension required?

During the coronavirus lockdown, many renters will have found themselves in a precarious and unstable financial position and may be unable to meet their rental payments. Under current regulations, homeowners have been able to arrange a mortgage holiday with their respective bank. However, no such suspension of rental payments exists for tenants.

With unemployment on the rise and widescale furloughing, many workers have suffered a reduction in income. Some have turned to universal credit (UC). However, those turning to universal credit are likely to see a substantial drop in their income, compared with their employment earnings. Research by the New Economic Foundation (“NEF”) warned that a single full-time wage worker turning to UC could face a potential 45% reduction in their income.

Suspension of possession

Almost 20% of UK households are privately rented. For these tenants it is estimated that approximately a third of their income goes towards paying rent. The figure when compared with homeowners is significantly less, at 17% of their income.

The lockdown measures may be felt more strongly by those renting their homes. The argument for greater tenant protection is clear. The current government guidelines around suspension of possession are due to expire in June 2020 and it is unclear whether there will be an extension to the original 90-day period.

Greater protection for tenants

In March 2020, the Labour Party called for rents to be suspended for those adversely impacted by the coronavirus outbreak. Labour amended its position in a press release on 9 May 2020 under new leader Keir Starmer.

The new Labour policy calls for an extension of the three-month suspension period on possession proceedings but drops the demand for suspension of rental payments. Instead, the new policy calls for tenants to be handed a two-year grace period in which to repay any arrears accrued due to the Covid-19 crisis. This shift from suspension to deferment has received harsh criticism from various quarters, with Starmer being accused of failing to protect struggling renters.

For all the criticism that Starmer’s policy has attracted, to date the government has failed to outline any plan for dealing with the mass of arrears accrued by tenants during the crisis and the inevitable deluge of possession claims that landlords will bring the moment the suspension is lifted.

In the absence of government action, grass roots movements such as the London Renters Union are calling for rent cancellation and organising tenants across the country to take collective action to protect themselves from eviction and unsustainable debt.

A worsening crisis

If the government fails to act, the flood of possession claims brought by landlords following the lifting of the suspension could result in a huge increase in the number of people at risk of losing their homes. There is no plan in place currently outlining how claims surrounding Covid-19 related rent arrears will be brought to Courts and how they will be handled.

What is clear is that this influx of cases will place a huge strain on housing lawyers and legal aid providers whose capacity to act for tenants facing eviction has already been greatly reduced by cuts to the legal aid budget in recent years. The lack of localised legal aid options in many areas of the country is sure to be starkly exposed.

The upsurge in possession claims and in turn, legal advice sought, is likely to mean that not all are able to access legal advice when needed. The result of people falling through the cracks could mean that many more evictions will take place. Such a situation puts even greater strain on local authorities already faced with severely limited housing stocks and reduced government funding.

The government faces an enormous social crisis if it fails to act and must urgently announce consider plans to protect tenants who have accrued rent arrears during the lockdown, whether via a suspension of rental payments or additional means.