Early last summer we realised tenants were falling into arrears as a direct result of the crisis. GMTU along with other tenant organisations, charities and unions repeatedly called on our government to extend the ban to protect tenants from homelessness.
Instead of using the last 14 months to come up with a plan to mitigate the effects of the crisis on tenants they simply pretended that everything would sort itself out and the problems would magically evaporate.
Liquidity vs Insolvency
The government is trying to apply a business model to ordinary workers and families. It's not a problem of liquidity, it's a problem of insolvency.
Large companies often borrow money and it is leveraged against other assets they hold, such as property, bonds or stocks - assets which can be liquidated to repay the loan if necessary.
Tenants who have fallen into arrears throughout the crisis have done so because their income has drastically reduced.
Those tenants are:
- • Unemployed and now claiming benefits
- • Furloughed and had their income cut by a fifth
- • Victims of fire and rehire and now doing the same job for lower wages
- • In precarious work or bogus self employment with reduced hours
They have no assets to liquidate and most won't be able to increase their income anytime soon in order to make the repayments.
Moreover, many are also in fuel debt, owing hundreds of pounds to utility companies. In effect, they are insolvent. They aren't suddenly going to land a high flying, well paid job with the current state of our economy.
Kickstarting the Economy
Our economy wasn't in great shape at the beginning of 2020 and the crisis shut down large parts of it. When lockdown fully lifts, a lot of companies that have been bumping along the bottom for over a year, with furloughed staff will no doubt fold when furlough ends.
Two thirds of our economy relies on consumer spending. Millions relying on our broken benefits system have no disposable income at all. By the government's own admission, Universal Credit is designed only to be a temporary measure providing mere subsistence at best. Additionally, with the disposable income of hundreds of thousands of debt burdened tenants consumed by rent repayments, economic recovery will surely be hampered.
At the time of writing, the new variant of the virus appears to be taking a hold and it is unsure whether Britain will be “open for business” in the very near future.
Ultimately, the cost of all this mess is going to come from the public purse. Millions will continue having to rely on benefits, and when people start losing their homes, cash strapped councils will have to put families in temporary accommodation at huge cost. Greater Manchester already has 4,000 households in temporary accommodation, and that system is at breaking point.
Families with children will be prioritised, and quite rightly so, but some will undoubtedly fall through the cracks in the system and they, along with lone tenants may end up on the street. The mental health impact and subsequent alcohol and drug related issues that result from homelessness are well documented as is the lifelong impact of poverty on children.
Cancel the Rent!
Last year we ran a campaign - #CanceTheRent. We explained that some big housing providers who own many thousands of properties across the country routinely make huge profits. Some are even owned by hedge funds, and we argued that these types of landlord could afford to absorb the cost of unpaid 'covid arrears'.
We also have many small landlords, owning just a few properties at most, and are living directly off that rental income. We think it would make economic sense for the government to reimburse those small landlords who may face hardship if they can't recoup that rent.
We want the government to wipe the slate clean and relieve the stress and burden from tenants who've already suffered enough, not knowing from one day to the next whether they are going to have to pay up or pack their bags.
It just makes more economic sense.