The group wants chancellor Rishi Sunak to use next month’s budget to clear rent arrears and provide £288m to allow landlords with struggling tenants to claim up to 80% of the rent due.

It says the move would keep half a million private renters in their homes.

The call comes ahead of members of the House of Lords debating the government’s most recent extension of the ban on enforcing evictions.

The House of Lords will debate the government’s extension to the ‘Christmas truce’ which stops bailiffs from evicting tenants until 21 February, except in limited circumstances.

Labour’s Lord Kennedy and Liberal Democrat Baroness Grender have tabled ‘motions of regret’ which criticise the new regulations for reducing the arrears threshold that means that tenants with more than six months’ arrears are still vulnerable to eviction, and highlight the financial challenges facing renters.

According to Generation Rent, in August 2020, 36% more private renters were relying on Local Housing Allowance (LHA) to pay their rent than in February 2020.

Generation Rent estimated that 538,000 private renter households in England were not receiving enough in LHA to cover their rent.

In January Citizens Advice estimated that half a million private renter households were in arrears by November, owing their landlords £360m.

As well as being grounds for eviction, rent arrears can also lead to a County Court Judgment which makes it more difficult to find a new home. It can also damage your credit score which can make it difficult to apply for mobile phone contract or credit card in future.

Under Generation Rent’s proposed Covid Rent Debt Fund, the government would clear renters’ arrears, keeping them in their homes, while allowing landlords to apply for compensation up to 80% of the original monthly rent.

While the idea of simply cancelling rent has raised concerns about landlords’ property rights, legal experts have backed Generation Rent’s proposal as a proportionate way of dealing with debt that balances the interests of landlords and tenants.

Alicia Kennedy, director of Generation Rent, said: “The government’s measures to increase support through the benefits system have failed to prevent half a million households racking up rent arrears, which will be impossible to pay back even when the economy recovers. While most are not at immediate risk of eviction, they are still being forced to pay the price of the pandemic and face the prospect of homelessness without further action. To get these people back on their feet, we need Rishi Sunak to step in and clear these arrears with a Covid Rent Debt Fund.”