Almost one million households are in rent arrears and facing a homelessness crisis

Almost one million renting households are at risk of homelessness after racking up arrears during the pandemic, new research has found.

The Joseph Rowntree Foundation’s (JRF) study found households on low incomes are trapped in a debt crisis. The number of households in arrears has tripled since the pandemic hit after Covid-19 squeezed incomes and saw thousands of people lose their jobs.

The anti-poverty charity now estimates 950,000 of the 11.6 million households with an income below £24,752 are in rent arrears while 3.8 million are behind on household bills. A further 1.4 million have debts for council tax while 1.4 million were behind on energy bills even before the current price rises are taken into account.

The Big Issue’s Stop Mass Homelessness campaign, which launched in summer 2021, has been warning of mounting rent arrears and rising living costs forcing thousands of people out of their homes this autumn.

Big Issue founder Lord John Bird said: ”The pandemic has pushed people who were just getting by to the brink of destitution.

“The research out today shows that this situation is being further heightened by the rising cost of living. We’re not yet clear of rough seas. We need to support people to stay in their homes – or risk the increased costs of homelessness.”

Tenants in rented properties can be evicted under section 8 of the Housing Act if they have more than two months of rent arrears. Last week homelessness charity Crisis warned the number of renters facing eviction on these grounds soared by 70 per cent in the first half of 2021. 

JRF’s survey of 4,000 adults on low-incomes uncovered a mounting debt crisis even before the impacts of the end of the furlough scheme and the £20 universal credit increase and rising energy prices and inflation have been felt.

We must give families the firm foundations they need to flourish and take part in our economic recovery

We must give families the firm foundations they need to flourish and take part in our economic recovery

Katie Schmuecker, deputy director for policy and partnerships at the Joseph Rowntree Foundation

Even without the rising cost of living and falling support, 87 per cent of households who are now feeling the squeeze on their bills told JRF they were always or often able to pay them before the pandemic hit.

Many people have been forced to turn to borrowing to make ends meet. Around 4.4 million households have taken on new or increased borrowing during the pandemic with a total estimated at £9.5bn. Around 70 per cent of these households are also in arrears.

The Westminster government will announce its financial plans at the Autumn Budget and spending review next week. JRF is calling on Chancellor Rishi Sunak to use the announcement to reinstate the £20 universal credit increase that was cut earlier this month and to offer £500m additional grant funding in the Household Support Fund as targeted debt relief.

Of those receiving universal credit in the survey, 40 per cent said they were not confident they will be able to pay their bills in full and on time, while 35 per cent doubted they could avoid taking on more debt. Meanwhile, half said they would struggle to find a job – despite the Westminster government’s reasoning that cutting £20 off universal credit was to focus on getting people into work.

“There is a debt crisis hanging over millions of families on low incomes,” said Katie Schmuecker, deputy director for policy and partnerships at JRF. “Behind these figures are parents gripped by anxiety, wondering how they will put food on their children’s plates and pay the gas bill; young people forced to rely on friends to help cover their rent and avoid eviction.  

“The Budget is about priorities. We must give families the firm foundations they need to flourish and take part in our economic recovery.”

A DWP spokesperson told The Big Issue the existing £500m Household Support Fund is in place to allow “councils to help the most vulnerable with essential costs through this winter”.

“We know the best route towards financial independence is through well-paid work, which is why our multi-billion pound Plan for Jobs is helping boost skills and opportunity, while universal credit continues to provide a vital safety net for millions,” the DWP spokesperson said.

The Child Poverty Action Group echoed JRF’s call for an universal credit u-turn in the spending review on October 27 alongside a boost for child benefits and support for childcare costs.

“These findings are a storm warning,” said Child Poverty Action Group CEO Alison Garnham. “Millions of families look very precarious as we sail into even rougher seas with costs and household debt rising.”

Meanwhile, debt charity StepChange said support during the pandemic had been vital but there was concern that many people had “yet to recover” from the financial shocks of the pandemic. Richard Lane, director of external affairs at StepChange, said: “We need to ensure that a compassionate approach is taken towards those struggling.”

Earlier this week Centrepoint warned youth homelessness has risen 40 per cent during the pandemic. Carol Huggins, from the charity’s Moneywise financial education project, said the debt crisis could push more youngsters into difficulty. 

“Choosing between paying rent or completing a weekly food shop is a frightful choice that we see too many young people having to make on a weekly basis,” said Huggins.

The Big Issue is working to prevent thousands of people hit by the pandemic from falling into homelessness in the months ahead through the Stop Mass Homelessness campaign. Sign our petition and find out how you can take action now here.