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Credit score damage could leave renters out in the cold

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Written by: Emma Lunn
28/05/2021
Thousands of private renters who have run up arrears during the pandemic could face problems finding an alternative home because of damage to their credit scores.

The National Residential Landlords Association (NRLA) says about 210,000 tenants may face severe difficulties in getting landlords to let to them in future, with the government refusing to support tenants and landlords in tackling Covid-related arrears.

The eviction ban ends on 31 May, meaning that from Tuesday landlords can pursue evictions against tenants in rent arrears. A NRLA survey found that 7% of private renters in England and Wales have built arrears since lockdown began in March 2020.

A quarter of those with arrears said that their landlord had attempted to reclaim these by seeking a court order. Such orders, where successful, damage a tenant’s credit score – an outcome which makes it for harder for them to access new housing in the future.

The data, compiled by research consultancy Dynata, shows that the average amount of rent owed by those in arrears during the pandemic is now almost £900.

The figures also show that more than 80% of renters now in arrears were not behind on their rent payments when the pandemic began. A third (30%) of those who are currently in arrears now owe £1,000 or more.

The majority of tenants in arrears do not qualify for emergency housing support provided by councils to help those in receipt of benefits. The government has also frozen housing benefit rates in cash terms, a policy the Institute for Fiscal Studies has branded as ‘arbitrary and unfair.’

Ben Beadle, chief executive of the NRLA, said: “As the private rented sector moves out of lockdown measures, the chancellor has failed to provide tenants with the support they need. This is especially the case for the majority of those in rent arrears who do not qualify for benefit support.

“Without urgent assistance, many tenants face the prospect of losing their home needlessly as landlords struggle to shoulder the cost of arrears. Affected tenants also potentially face the negative impact of damage to their credit scores.

“The government needs to develop a financial package which ensures that benefits cover the rents of those in receipt of them. For those who do not qualify for benefit support, an interest free, government guaranteed tenant hardship loan should be established, similar to those in Wales and Scotland.”

The imminent end of the eviction ban means increasing numbers of private tenants are turning to Citizens Advice for help. Citizens Advice data shows that in January to April 2021 there has been a 17% increase in people with eviction issues approaching the charity compared to the same period in 2020.

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