Call to freeze all UK private rents to help 1m workers at risk of losing jobs

More than a million renters in Britain risk losing their jobs in the coronavirus pandemic and should be protected by an immediate rent freeze, according to a thinktank.

Calling on the government to suspend all private rents for three months as an emergency measure to protect those most at risk, the New Economics Foundation (NEF) said 1.2 million people living in privately rented homes could fall into severe financial hardship otherwise.

These people are among 5.6 million it identified who will miss out from the government’s Covid-19 job retention scheme, due to having their hours cut or being made redundant rather than being furloughed. It also includes people ineligible for the self-employed income protection scheme.

More than a month into lockdown job losses are mounting across Britain as the country slides into the deepest recession for at least a century. While ministers have launched an unprecedented package of financial aid to cushion the blow, including these wage subsidies, millions still risk slipping through gaps in the safety net.

Urging the government to take further steps to support those facing financial hardship as the Covid-19 pandemic exacerbates existing inequalities between homeowners and renters, NEF said renters who lost their jobs would need to rely on universal credit benefits.

However, it warned that a single, full-time minimum wage worker on universal credit could face a 45% reduction in their income. For those living in London, this would leave just £55 a week (£238 a month) to pay for all essentials outside rent, such as food and utility bills. It said average bills in Britain, before food costs, are estimated to be around £237 a month.

Private renters were already financially vulnerable prior to the pandemic, with a third of disposable income on average spent on rent, compared with 17% of income spent by homeowners on mortgage costs. According to government figures, more than a third of private renters live in relative poverty.

Renters’ unions have called on the government to suspend rents for the duration of the coronavirus crisis, after research carried out for the Guardian by Opinium revealed millions are having to choose between paying landlords or putting food on the table.

Around 6.2 million adults are in work and live in privately rented accommodation across the UK. Although most stand to benefit from the government’s Covid-19 job retention scheme or support package for the self-employed, the foundation found that 1.2 million would slip through the safety net.

However, the leftwing thinktank said even furloughed private renters could struggle. According to the report, a worker on median wages would see their disposable income drop by 16% on average, leaving less than half their salary remaining to meet all other costs of living.

Ministers have announced some measures to protect private renters during the Covid-19 outbreak, including a temporary ban on evictions.

Housing benefit has been increased marginally and landlords have been asked to show compassion by agreeing affordable repayment plans. However, the report warned that limited action had been taken on rents, which are still legally owed, meaning millions could still face severe financial hardship.

Alongside an immediate suspension on rents, NEF said that payment of residential mortgages should also be frozen to protect landlords from a gaping hole in rent income. To prevent a further knock-on impact for high street banks and other major mortgage lenders, it said the Bank of England could be used to provide low-cost loans.

Joe Beswick, head of housing and land at the foundation, said: “If we are to avoid an eviction crisis from rent arrears following the public health crisis, we must suspend the obligation to pay rent immediately.

“Many of those in the private rented sector, a group who were already economically vulnerable before this crisis, are falling through the cracks of the government’s support systems.”

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