How the pandemic has hit the poorest renters the hardest

Data on the rental market highlights the inequality exacerbated by the Covid-19 crisis in the UK. 

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“We live in a flat with no garden. It’s extremely hard. I don’t get anything from my little zero-hour-contract, part-time job, and all the expenses have doubled due to us being home constantly… [Covid’s] overall effects have been very damaging. We’re in rent arrears and not sure if we’ll have a place to live after all this,” a single parent in the East Midlands said in a recent survey by the Child Poverty Action Group (CPAG) assessing the impact of the pandemic on low-income families. The findings highlighted the inequality caused by Covid-19 in the UK. 

This voice is just one in a chorus. According to CPAG’s survey, around 80 per cent of respondents reported a significant deterioration in their living standards since the pandemic started, due to a combination of falling income and rising expenditures. Most of the people surveyed were already living close to the poverty line before Covid-19. 

Numerous studies have shown how low-income households have been disproportionately affected by the pandemic’s economic fallout, not least since professionals and locations have been unequally impacted by the move to working from home. 

These issues are highlighted by recent trends among UK renters, a less wealthy demographic than homeowners. Between May and September, the number of homes let in the most affluent areas of the UK was 1.3 per cent higher than the same time last year, while in the most deprived areas, the number of lets agreed was 14.8 per cent lower over the same time period, according to Hamptons International, an estate agent.

There are various reasons for this. “[For one], people in the lowest-income bracket now have less money to move somewhere better with more space,” says Anthony Breach, a housing analyst at the Centre for Cities. 

New rentals have fallen furthest in the most deprived parts of the country
Year-on-year (May – September 2020) change in the number of new instructions and homes let by deprivation
Source: Hamptons

This is reflected by the fact that Covid-19 has caused 227,000 adult private renters in the UK to fall behind on housing payments, according to polling carried out for Shelter in June. Adding to their woes is the fact that housing conditions are poorest for Britain’s 5.5 million privately rented households, with 25 per cent of these failing to meet the government’s Decent Homes Standard, according to the Social Market Foundation. The pandemic has worsened the difficult living conditions already experienced by many low-income families. 

CPAG’s report includes numerous examples of this: “Survey respondents told us that they were now in overcrowded accommodation as a result of taking on extra caring responsibilities. Many had no outdoor space, and others were painfully aware of the poor-quality accommodation they were in and the improbability of that changing anytime soon.”

To reduce costs, many private renters live in shared housing, in part because of housing benefit rules. For them, problems of overcrowding have been particularly acute, not least since private rented homes in England are on average 28 per cent smaller than owner-occupied homes. 

“Some families have expanded during lockdown as older children returned home or elderly relatives moved in, placing an additional financial burden on household finances. Low-income families [are very] aware of these extra costs because [they are] already living on such a tight budget,” according to CPAG’s report.

Read more: The space race: how Covid-19 is driving renters to the suburbs

Overcrowding is a major health concern. Nearly a third of adults reported having had mental or physical health problems during lockdown due to the condition of, or lack of space in, their home, while analysis from the New Policy Institute highlights how overcrowded households have an increased risk of Covid-19 transmission. 

Worse still, black and ethnic minority groups are more likely to live in overcrowded homes, which is one reason why these communities have witnessed a disproportionately high number of fatalities from Covid-19. They also tend to live farther away from green spaces. 

That the least wealthy renters have borne the economic brunt of the pandemic is highlighted by trends in the more affluent world of home purchasing, which bounced back strongly this summer. Meanwhile, in the UK’s prime property market, demand has soared.

The fact that the UK’s most deprived areas rented the least this summer, according to Hampton’s data, is underlined by a larger, pre-existing inequality. 

The rental market has recovered more slowly in the most deprived areas
Year-on-year change in the number of homes let
Source: Hamptons

“The decades-long affordable-housing crisis has now reached a crunch point. Our failing planning system rations the amount of housing so tightly that there's basically no vacant housing stock in the UK,” says Breach. 

With almost no housing surplus, the UK government lacks reserve homes for the most vulnerable people to move into during times of crisis, such as now. 

Even before the pandemic began, the UK had a shortage of 1.2 million homes. Now another 84,000 have not been constructed due to Covid-19 disruption, with social and affordable houses hit particularly hard.

“There are over a million households on social housing waiting lists and even more likely to join them as the recession bites – making the case for social homes self-evident. The pandemic has shown that a safe home is fundamental, but just not enough people have one,” Polly Neate, chief executive of Shelter, stated in June

Not only is there a shortage of housing, but much of the current stock is of substandard quality. According to official figures, in 2018, 18 per cent, or 4.3 million homes, did not meet the minimum requirements defined by the government’s Decent Homes Standard. 

For those in poor-quality homes, lockdowns have increased their exposure to cold, damp and other hazardous conditions. With winter starting and restrictions continuing, this challenge is ever more pressing. 
 
“Last year, a fifth of all excess winter deaths were attributed to cold housing. With the lockdown delaying essential works to improve the energy efficiency of homes, and the economic strain predicting more people living in fuel poverty struggling to heat their homes, there is a risk of a perfect storm this winter,” writes Clair Thorstensen-Woll, a researcher at the King’s Fund. 

However, the predicament for low-income individuals would have been even more dire had the government not implemented certain emergency measures. 

Read more: Could mass home-working “level up” the economy?

“I’d be much more concerned if the number of lets agreed were skyrocketing amongst the UK’s most deprived areas, because it would mean people are being forced to leave their homes and then compete in a market with very limited housing,” says Breach. 

The fact that this is not happening suggests that the government's policy on rents – such as the banning of evictions during part of the pandemic – is working somewhat, he adds. “Why rent a new house if you don’t have to worry about eviction? [Moreover], it was riskiest for people on lower incomes to move home this summer, as they might be leaving a landlord who was giving them a discount.” 

Without the ban on evictions, which ended in September but was reinstated in areas in Tiers 2 and 3, a social and health crisis could have ensued, since the ending of a private tenancy is the leading cause of homelessness. According to reports, however, tens of thousands have been made homeless, despite these steps.

With tiered coronavirus restrictions continuing across the country, the UK’s poorest communities will need continued and increased financial support from the government. More importantly, Covid-19 has laid bare the UK housing crisis. All eyes must therefore be fixed on the government’s much-overdue and ongoing planning reforms. 

Sebastian Shehadi is a senior editor at Investment Monitor

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