How we could avoid the looming homelessness crisis – and save billions at the same time

Covid has pushed thousands of people to the brink of homelessness. There was no break for renters during the pandemic. While an eviction ban protected them from losing their homes for the first year, there was no welcome payment holiday like that handed to mortgage payers. Many have racked up thousands of pounds in arrears.

And the pressure is increasing. Property site Zoopla reports that rent increases have hit a 13-year high as demand has skyrocketed without an increase in supply to match.

The typical cost of renting in the private sector now stands at more than £800 per month, and that cost has risen by six per cent during the year to the end of September and has surged three per cent in the last three months alone.

With rents now amounting to 37 per cent of a single tenant’s monthly income, keeping up with the pace is a challenge at a time when Covid-driven uncertainty still remains within the economy.

The Big Issue has been calling for the government to intervene and protect renters from falling into homelessness. Many of the people at risk have never been in danger like this, or faced debts like they do, throughout their entire lives. Our Stop Mass Homelessness campaign has been advocating on their behalf for several months. 

Now, we make our call simple and urgent. The government must step in to pay £360 million in rent arrears now to prevent homelessness or face greater costs down the line. We have crunched the numbers. We understand the cost. Action is needed. 

Breaking down the cost of homelessness

The Big Issue knows prevention is often better than cure. It’s the mantra that drives initiatives like Big Issue founder Lord John Bird’s Future Generations Bill – preventing the problem before it develops is better than allowing it to manifest later.

That’s why we set out to find out whether paying rent arrears upfront makes more financial sense than picking up the costs of homelessness afterwards.

Since our Stop Mass Homelessness campaign launched, we have been pointing to Citizens Advice research from earlier this year that showed half a million renters were in arrears during the pandemic, racking up £360m in rent debt.

More recently StepChange ran a YouGov poll that put those figures into stark reality: out of that half a million, 225,000 told the debt charity they were “probably” or “likely” to lose their homes.

If 225,000 people fall into homelessness, how much will that hit the Treasury?

The cost of homelesness is difficult to quantify because the issue is complex by its nature – it hits every part of a person’s life and impacts on different services and corners of society.

Of the little research on the issue, a 2016 study by Crisis, Better than Cure?, gives the most comprehensive breakdown of how much homelessness costs local authorities, support services, the NHS and the criminal justice system. Preventing homelessness for one person for one year saves around £9,266, according to the homelessness charity. Add in the cost of prevention – bringing in support to prevent someone from falling into homelessness in the first place, which Crisis estimated to be around £2,263 – and that gives averted costs of £11,529.

For each of the 225,000 renters at risk of homelessness, preventing this scenario could save an eye-watering £2.6 billion – around £2.2bn more than paying off the £360m in arrears right now.

And the difference is likely to be greater too when costs around evictions are also taken into account – they vary too greatly from each situation to reliably calculate. But the result is clear: acting now will save money later at a time when government spending has gone into overdrive to cover the costs of the pandemic.

Why our campaign will continue to call for action

The Big Issue has been sounding a warning of a homelessness crisis since the summer as lockdown measures began to ease and vaccination efforts got into full swing.

Some of the vital protections introduced by the government have been unpicked in the months that followed.

Eviction bans wrapped up in May and June in England and Wales – a crucial intervention in the first year of the pandemic, when work-from-home guidance meant millions of renters were left relying on furlough or Universal Credit to make ends meet.

Now we are in, to borrow Professor Jonathan Van-Tam’s football parlance, half-time in extra-time in terms of the pandemic, those vital interventions have also been kicked into touch.

The furlough scheme wrapped up at the end of September, while the £20 Universal Credit increase – worth around £1,000 a year – was withdrawn days later. This came at a time when energy prices shot up and the price cap increased by £139, clobbering people with less even harder and driving them to the decision everyone wants to avoid: whether to heat or eat.

Some people will be forced to turn to foodbanks to do the latter; for others there will simply not be enough money coming in to keep a roof above their head.

The result will be homelessness.

We have already seen signs that more people are losing their homes. Last week Ministry of Justice figures revealed that almost 5,000 landlord possessions took place across England and Wales between July and September.

This was three times as many evictions in the previous quarter and the first three-month period since the ban on bailiff-enforced evictions ended in England on May 31 and on June 30 in Wales.

“These figures make clear how damaging it was for the UK government to end the eviction ban without providing sufficient support for renters who had built up arrears in the pandemic,” said Jon Sparkes, chief executive of Crisis, in response to the figures.

The next set of statistics will show the true impact of reduced support through the autumn.

It is a time in which “more people are at risk of homelessness now than at any time in living memory”, said Lord John Bird, founder of The Big Issue. He issued the warning at the launch of the Stop Mass Homelessness campaign in July.

The Big Issue has laid out three simple actions to tackle this issue: pay off the £360m in rent arrears racked up during the pandemic, put an end to no-fault evictions and provide jobs and training in sustainable industries.  

We already know one of those demands won’t be met until next  year. The private rental white paper that is set to outline replacements for section 21 evictions – known as no-fault evictions because they allow a landlord to evict a tenant without giving a reason – has been delayed until next year.

Meanwhile governments have acted to reckon with rent arrears. Both Scotland and Wales have offered grants and loans. The Scottish government has announced £10m in grants to help renters in arrears alongside a £10m Tenant Hardship Loan Fund, with discretionary housing payments also available from local authorities.

In Wales there is the Tenancy Hardship Grant or Tenancy Saver Loan scheme.

As for England, the Department for Levelling Up, Housing & Communities announced a £65m pot of cash for renters in arrears, distributed through local councils via the Household Support Fund. This is on top of the £500m announced in September when the HSF was unveiled.

Housing secretary Michael Gove told MPs at the Housing, Communities and Local Government Committee last week that he hoped the money would be sufficient.

He said: “I hope it will be enough and it is certainly the case that Shelter and others welcomed the additional funding. It’s not the only way that local authorities can help and not the means that we can use to deal with overcrowding, homelessness and the fragility of people who find themselves on reduced resources as a result of Covid.

“I hope it will be enough but I’m open minded about what other steps we might need to take.” 

The Big Issue’s calculations find that it is likely to fall short at a time when need is great.

This pandemic started with the promise of ending homelessness for good, at least on the street. The Everyone In scheme protected 37,000 rough sleepers and vulnerable people in hotels and other emergency accommodation as the virus swept the UK.

For Covid-19’s legacy to be a mass homelessness crisis would be unfathomable and unforgivable. Now is the time to ensure that doesn’t happen.

The price of inaction is simply too much to pay.

This article is taken from The Big Issue magazine. If you cannot reach your local vendor, you can still click HERE to subscribe to The Big Issue today or give a gift subscription to a friend or family member. You can also purchase one-off issues from The Big Issue Shop or The Big Issue app, available now from the App Store or Google Play.