70% increase in renters on Universal Credit struggling in severe arrears - Crisis responds
Today, the Government has published new figures which show that over 190,000 low-income renters on Universal Credit in England are at least two or more months behind on their rent – a rise of 70% in just half a year.
The new figures come exactly a week after the Government imposed a cut to Universal Credit which has seen households lose an average of £87 per month or the equivalent of £1,040 over a year. With many people already struggling to keep their head above water amongst escalating energy prices, higher food costs and inflation expected to go above 4% by the end of the year, these figures heighten fears that struggling households will be pushed further into debt and homelessness.
Responding to the figures Jon Sparkes, Crisis Chief Executive, said: “These figures are far worse than we feared and must act as a wake-up call to government to act now if we are to pull hundreds of thousands of renters back from the brink of homelessness.
“The cold reality of the Universal Credit cut is forcing people into impossible decisions about whether to turn on the heating, put food on the table for their children or pay the rent. How do we expect to level up the country when families can’t even afford the basic necessities?
“There is still time to fix this. It’s vital that the Government use the upcoming Spending Review to reverse this decision and reinstate the £20 lifeline so we can prevent struggling families from losing their homes this winter. Anything short of this could be catastrophic.”
Notes to Editor:
- Calculations are based on data from the Household Resilience Study: Wave 3 (published October 2021). The 190,000 figure describes the number of households on Universal Credit in England who were in two or more months of arrears during April-May 2021 (the period covered by the data); given that these households typically do not have any savings to draw on, we assume that household arrears have not been resolved. The figure does not take account of households who were in arrears of shorter length or who have since entered rent arrears, meaning that this figure should be taken as a lower bound.
In Wave 2 (published April 2021), 114,000 households on Universal Credit in England were in two or more months of arrears during November-December 2020, the period covered by the previous wave of data.
Housing Benefit rates (and the housing costs component of Universal Credit) have been frozen since April this year. This means the rents are no longer linked to market rents, at a time when families and individuals up and down the country continue to struggle with the economic impact of the pandemic. When people can't afford their rent, they often rely on the rest of their Universal Credit payment to make up the shortfall, or risk losing their homes. The previous four-year freeze in LHA rates (2016-2020) undermined the affordability of the private rented sector and led to increased use of temporary accommodation as councils struggle to prevent and end homelessness due to a lack of affordable options.
From the 1st June 2021 until the 30th September 2021 the UK Government announced that anyone served a section 21 notice in England would need to be given a notice period of at least four months. From the 1st October 2021 the notice periods are expected to reduce again to two months' notice for a section 21, which was the required period before the pandemic. For tenants in arrears, from the 1st August 2021 landlords only have to give a minimum notice period of two months for arrears less than four months. For arrears four months and over, the notice period drops to four weeks.