Generation Rent has called on the Chancellor to take action in the Budget to clear runaway rent arrears, as government figures reveal 700,000 private renters on Universal Credit cannot cover their rent.
New figures from the Department for Work and Pensions (DWP) revealed that in November 2020, 715,326 households in Great Britain could not cover their rent in full with the Local Housing Allowance (LHA) they received as part of their Universal Credit claim.
This is an increase of 45% since February 2020.
In the same period, the total number of private renter households receiving Universal Credit increased by 85%.
The increase in LHA rates to cover the cheapest 30% of local rents has increased the proportion of Universal Credit claimants who are able to cover rent.
But 40% of private renters rely on either Universal Credit or housing benefit, meaning that many invariably live in homes that cost more than the state provides according to Generation Rent.
The DWP figures show more than half (54%) of private renters receiving Universal Credit do not receive enough.
Shortfalls between LHA and actual rents are forcing tenants to borrow, use savings or go without essentials to pay their landlord, or get into rent arrears and risking eviction according to the campaign group.
Citizens Advice estimates that half a million private renter households were in debt to their landlord in November, owing £360m.
Generation Rent is calling on the government to create a ‘COVID Rent Debt Fund’ to clear rent arrears and compensate landlords up to 80% of rental income, in line with the furlough scheme.
The campaign group is also calling for suspension of no-fault evictions and an increase in LHA rates to make sure that tenants on reduced incomes can keep a roof over their heads.
Alicia Kennedy, director of Generation Rent, said: “Every one of these households faces an impossible choice every month to pay the rent, borrow, or go without essentials.
“The government’s inadequate support for private renters is pushing families deeper and deeper into debt, with homelessness and destitution awaiting once the crisis of the pandemic clears.
“Next week Rishi Sunak must act decisively to end the rent debt crisis, and bring peace of mind to private renters who have been hit the hardest by the economic shock.”