Jessica* is angry – and she’s not the only one. In a few days’ time, the temporary ban on evictions from rented housing, introduced soon after the coronavirus crisis began, will be lifted; and tens of thousands of renters still struggling with falling earnings face the risk that they may lose their homes. “I don’t think the government have a clue about how it’s affecting people,” she says. “We really are in trouble.”
Even more galling, as Jessica and her husband contemplate the home they’ve rented for the past 11 years, is the knowledge that millions of homeowners and those already in the property market are getting more help – among them, the nation’s landlords. Mortgage repayment holidays will be available until the end of October, and for anyone with the means to buy or sell a home, stamp duty has been lifted until well into next year.
Meanwhile, the owner of the property Jessica considers home still expects the rent to be paid in full each month. “It’s like coronavirus isn’t even happening for my landlord. All they want to know is if they’re getting their rent,” she says.“They’re giving all this help to people with mortgages, full-time jobs and we’re forgotten about.”
The stark truth is that the economic and social impacts of the coronavirus pandemic are likely to be felt differently, depending on whether you rent or own your own home.
When evictions in England resume at the end of this month, many younger and lower income households, who are far more likely to rent, face the prospect of losing their home. The housing charity Shelter estimates that 227,000 private renters have fallen into arrears since the start of the pandemic. With unemployment set to rise, this represents the tip of the iceberg.
The government’s initial offer to renters deserves some credit. Suspending evictions and launching a UK-wide furlough scheme kept many in their homes and able to pay their housing costs. But the end of the ban, coupled with the withdrawal of the furlough scheme in October, will leave many potentially on the brink of losing not just their income but the roof over their head.
In response to these concerns, the government has announced that landlords must follow a new pre-action protocol before starting an eviction. This was intended to protect those who have fallen behind on their rent or face hardship as a result of the pandemic. However, there is no guarantee it will be enough.
Landlords in England will still be able to use a Section 21 notice (a so-called ‘no fault eviction’) from the end of the month. In that case, a landlord does not need to give a reason to seek possession – rendering the government’s planned pre-action protocol a blunt instrument. Even if a tenant has suffered hardship, for most tenancies the landlord retains the right to use this procedure, provided they follow the right legal steps.
In contrast to the uncertainty faced by renters, those who already own property or can afford to buy their own home are likely to be buoyed by recent announcements. Stamp Duty Land Tax has been suspended until March on all property up to £500,000. Coupled with record low interest rates, it will encourage people to trade up their homes and give sellers the confidence to raise asking prices.
This tale of two housing markets captures the stark inequalities at play within this country. Bank of England data shows that households with an income below £35,000 are far more likely to have run down their savings during the pandemic than higher income households. In contrast, those with higher incomes, who are far more likely to own their own homes, have seen their incomes unchanged and their household spending reduced. Consequently, many higher earners have increased their savings during the pandemic.
Yet economic uncertainty, combined with a limited set of protections, has pushed many to the brink. Jessica, who is self-employed, has been seeking urgent help from Citizens Advice. Like millions of others, when lockdown struck her work dried up. At the same time, a job offer to her husband was withdrawn. For months they have had to rely on other family members to help them avoid accruing rent arrears. They know this isn’t sustainable and now, she says, “We’re at a crossroads – we don’t know what our rights are, and what we can do and what we can actually say to them. How can the government lift the protections when people are unable to work?”
The government’s approach risks alienating a growing cohort of the population. More fundamentally, its favouritism towards the property-owning classes risks exacerbating inequality between those who own and those who do not. This will have profound intergenerational effects, with the youngest the least likely to have experienced what it is like to have a secure and stable place to call home.
The government needs to act. It must extend its ban on evictions, as the only sure-fire way to keep people in their homes. New policies should give renters the support they need to weather the storm. This could best be done by ensuring that Local Housing Allowance, which determines how much housing benefit private renters can claim, covers at least the average market rents in a local area and is readily accessible to those who need it.
The government should also re-commit itself to more fundamental reform of the private rented sector. It should bring forward its plans to ban ‘Section 21’ no-fault evictions, and commit to open-ended tenancies, greater protections for tenants and rent caps, as proposed by IPPR.
More fundamentally, this is the moment to fix our broken housing market. That means ending land speculation, increasing the supply of genuinely affordable homes and creating a market characterised by security and affordability and not profit-making. Such fundamental changes will not be easy to enact, but the imperative is clear – otherwise, inequality in housing will only worsen. This will leave many more families, like Jessica and her husband, on the brink, and will deny many more their housing aspirations. If ever there were a time to create a fairer housing market, surely it is now?
*Name has been changed.
Jonathan Webb is a research fellow at IPPR.