Is it time to prioritise housing security?

Housing security needs to be high on the agenda as we build back better post-Covid

Covid-19 has undoubtedly had an impact on all aspects of our lives causing economic hardship for many in the short-term and the fear of impending crisis hanging over many more. With unemployment levels rocketing, housing security must be a priority. While social housing is an option for a few, and local councils have been working hard to provide accommodation for the homeless with some success, currently the resources are not available to meet the levels of demand that seem inevitable.


What new measures are in place?

The Coronavirus Job Retention Scheme has certainly eased financial anxieties as has the suspension on evictions. The government has also provided £500 million to ‘fund households experiencing financial hardship’. But these measures are very much a short-term safety net. How will households cope with the threat of redundancies when the furlough scheme ends completely in October?

Even those furloughed on a median income may have found their finances have taken a hit, particularly if their rent or mortgage payments are a substantial portion of their monthly income, which is often the case in the Bristol and Bath area. For others on rent holidays, the debt will be piling up, and job losses are certainly a worry for many post-furlough.

Local Housing Allowance (LHA) has been guaranteed to cover at least 30% of market rents in a claimant’s area. This is not enough, especially for those who are awaiting inevitable redundancies. Homelessness charity Shelter called for the LHA rates to cover average rents across every local market during Covid-19 so that those claiming LHA for the first will be able to pay their rent without going into arrears.


Universal Credit applications increase

The financial aid the government has given during this time has been essential but, unfortunately, it is difficult to accommodate everyone’s particular circumstances. In an ideal world, Universal Credit should cover housing costs as a minimum. This means that people would receive different amounts based on the cost of their rent until the economy recovers. However, with the number of Universal Credit applications increasing to nearly 2 million due to the pandemic, it’s unlikely that this measure will be taken.

Universal Credit often does not cover the cost of rent or mortgage payments, as it’s set at the Local Housing Allowance rate to cover only 30% of rents in a local area. This presents problems not only for residents but also for landlords, who have been highly affected by the furloughing of young renters.

The government’s advice to private renters is to speak to landlords as soon as possible; some landlords will be able to take a mortgage payment holiday if renters are struggling. Personally, I would strongly argue that Universal Credit should cover all rent for a minimum of six months for those who experience a financial shock at the current time. This would leave those who find themselves unable to pay rent at less risk of having to uproot families from schools, friends and neighbours at little notice or struggling to pay for essentials as all of their Universal Credit goes towards rent.

For mortgage payers, deferrals are an option, but this accrues interest. This is not a long term solution, particularly if your job is vulnerable. At the very least though mortgage holders are likely to have much more time to adjust to changes in circumstances than renters. Mortgage companies tend to use repossession very much as a last resort these days, following many years of regulatory intervention and pressure.


Is this an opportunity to change post-Covid?

With our homes taking on new meaning during lockdown becoming our schools, offices, gyms and social spaces, the importance of having a secure roof over our heads is thrown into sharp relief. Housing security needs to be high on the agenda as we build back better post-Covid.

The government announced a £3.2 million emergency fund available to all local authorities in March to provide emergency housing for homeless people in England. This scheme helped to house around 5,400 rough sleepers and help engage hard-to-reach people with addiction and health services. However, what happens when this scheme stops in England? The governments in Scotland and Wales will continue to fund their particular programmes, but in England local authorities are once again left to pick up the pieces while already under considerable financial strain. However, this particular initiative demonstrates what can be achieved when there is a political will.

In the medium term, our country desperately needs better security of housing, particularly for renters. While Theresa May’s government had brought forward proposals to ban no-fault evictions it’s unclear whether these will move forward under Boris Johnson. However, this should be an absolute minimum. Further action should include capping any rent rises once in a tenancy at the CPI inflation measure in the same way as many other costs and benefits payments are capped. In addition, there should be a minimum six month notice period for landlords to tenants in all circumstances except where a tenancy is less than six months.


Credit Unions are here to help

The current housing crisis may also lead to more people seeking the help of housing cooperatives run by their members for the benefit of their members. This option gives renters more control over how their housing situation is managed. We’re keen to help support any local housing co-operatives to get off the ground, or to expand their provision, so if you’re looking at co-operation in housing then do get in touch.

As an organisation run by our members and here for our community, housing security is close to our hearts. During 2018/19, BCU offered interest-free loans to 277 people at risk of homelessness. We also extended our partnership with Bristol City Council to help administer a rent guarantee scheme, which aims to keep people housed when they are in difficult circumstances - a crucial safety net.

While not-for-profit cooperatives and credit unions offer vital help, in such circumstances, there is a limit to what can be achieved without additional governmental funding measures. Universal Credit that covers full rent payments in perpetuity may not be a viable option, but there could be a middle ground here.

Until the economic situation improves or government support is extended, credit unions are an invaluable source of information, support, and advice. Bristol Credit Union remains open on an appointment-only basis for those needing help to apply for local housing. We also offer a rent direct scheme, where Universal Credit money can be paid directly to the landlord for rent, making money management easier for those who are used to having previous benefits paid directly to their landlord.

As we look forward to an economic recovery that builds back better and more sustainably, it is clear that housing security must remain high on the agenda.


Find out more

Here are useful links for tenants, and for homeowners, who should initially discuss the situation with their lenders. If you are interested in joining our credit union, you can find out more here.

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Posted on
01 September 2020