Blog Post

Coronavirus and housing: Government doing nothing much

<strong><span class="has-inline-color has-accent-color">by Dermot McKibbin</span></strong>
by Dermot McKibbin

Labour, Housing, Co-operative Party activist, campaigns to replace feudal UK leasehold housing tenure with the modern co-operative Commonhold system.
Vice-Chair Beckenham CLP.

The government has been accused of being unclear in its communications around Coronavirus. But this headline appears on the Ministry of Housing website; ‘Complete ban on evictions and additional protection for renters’. Poor communication or a straightforward lie?

The policy is actually to ‘suspend new evictions’ until after the crisis, initially 3 months. So, Minister Robert Jenrick’s statement that ‘no renter who has lost income due to coronavirus will be forced out of their home’ is a short-lived commitment.

They call it a ‘radical package’ which it plainly is not. They fail to address basic questions about possession proceedings that are already underway. Surely no-one should be evicted in the current crisis.

So far, no additional measures have been introduced to enable tenants to pay their rent, whether they are in work with reduced pay, laid off from work, or already not working. So, the best that can be said for the policy is that it will defer possession proceedings from starting and will therefore delay eviction. Protection from eviction during the crisis is of course important (although some people have noted that the Courts may well be closed anyway), but what is needed is a policy to prevent tenants being forced into arrears during the crisis, for which they may be evicted afterwards.

Landlords with buy to let mortgages have had the ‘mortgage holiday’ policy extended to them. This is something they can apply for and the devil might be in the detail. But if a landlord qualifies for a holiday, no arrangements have been announced to make sure the benefit of this is passed on or at least shared. Landlords who qualify will of course need to catch up with their mortgage afterwards, although many will add the 3 months to the end of their term, which might be 20 years away. It could be that tenants who pay rent will essentially be creating a short-term cash-flow boost for landlords. Meanwhile, those tenants who cannot pay will accrue arrears, which they may not have the income to repay, and might face possession proceedings when the crisis is over.

At that point the policy falls apart entirely. There will be a strengthened ‘pre-action protocol’ before possession proceedings – engagement between landlords and tenants to establish a repayment plan and to ‘resolve disputes’, during which landlords should ‘reach out’ to tenants to ‘understand the financial position they are in’.  Almost unbelievably, “The government will also issue guidance which asks landlords to show compassion and to allow tenants who are affected by this to remain in their homes wherever possible.” I have little belief that the protocol will work in practice as intended. And it not a criticism of landlords – Twitter is full of both good and bad examples of landlord behaviour, that’s how the sector works – to say that NO policy should be determined by hoped-for ‘compassion’ rather than rights and obligations in law.

In practice, many tenants may be saved by the fact that landlords will see value in hanging on to existing tenants even if they get into Coronavirus arrears. Given the broadly-based reduction in incomes and hence savings that is likely over the next few months, one predictable market correction might be a reduction in rents and the costs of starting up new tenancies. Under these circumstances, keeping a tenant on an existing contract might be an attractive option.

Given that the Chancellor was talking in terms of hundreds of billions of pounds in loans for businesses, the government should be pushed into actions like those taken in other countries to guarantee incomes, putting money directly into the hands of those who are affected by the crisis to enable them to maintain the basics of existence. I would argue that the same should apply to the biggest cost of all, housing. Affected renters must be enabled to pay their rent through direct support from government, not the goodwill of landlords (private and social) – although that is also to be encouraged.

I’m not expert enough to know the best detailed mechanism for achieving the aim of enabling people to pay rent, I assume it’s a mix of entertaining new emergency housing benefit claims, changing Universal Credit rules (paying it immediately, guaranteeing that the housing element will cover all of the rent), and relaxing current policies like the bedroom tax (otherwise how are people to obey the government and ‘sleep in the spare room’ if they get Covid19?). But the purpose of policy must be to enable people to pay their rent during the crisis and to avoid the debt which will create a crisis later. Even the awful Iain Duncan Smith has called for benefit rates to be increased.

Jenrick’s performance as Housing Minister during all this has been exceptionally poor and uncaring. Homeless people and tenants have been inconvenient afterthoughts with half-baked inadequate policy responses. Some loose change for rough sleepers, nothing that I have seen for people living in temporary accommodation (eg extra rooms), no workable special arrangements for people living in shared accommodation or overcrowded housing.

Of one thing I have no doubt: Jeremy Corbyn and John McDonnell would have risen to the challenge – indeed they are doing so in opposition – in a way that Johnson is incapable of doing. Because today’s Tories have not learned the lesson that was learned by the Victorians – as we are reminded by Jules Birch

Go back a century and more, and it was public health concerns about infectious disease spreading from insanitary slums that led to the rise of council housing and the birth of the welfare state in the first place.

If the Coronavirus is as bad as some are predicting, this lesson will have to be learned all over again.

As the government publishes the required legislation, keep in touch with commentary via the excellent @nearlylegal twitter feed and blog and of course @insidehousing 

2 replies on “Coronavirus and housing: Government doing nothing much”

Any tenant with savings or capital over 16K is not presently entitled to any UC or HB remember so that would have to change immediately if the benefits system is going to be the go-to solution for *any* tenant, and not just some of them. Generation Rent includes an increasing number of older tenants now of course, many of whom have those savings and assets to speak of.

Let’s also not forget that landlords continue charging rent even when their mortgages are paid off. So any mortgage holiday they’re entitled to is going to be more than made-up for, really. If they sell it, meanwhile, then (I think we can assume) there are capital gains. Landlords might struggle to get any mortgage holiday *unless* their tenants are in hardship though, so, that’s a little catch 22. Landlords without mortgages – living off their tenant’s rent/income – should be expecting the Govt to support them, not tenants.

All this really is the starkest reminder that a nation’s housing is far too important to abandon to private investors and goodwill, just as we’ve done.

Thanks for comment. I defer to others on the detail, it’s a long time since I worked in HB! My point is that the aim of policy should be to enable tenants to pay rent through direct help not just hoping that some roundabout route will ensure landlords are sufficiently compassionate to not evict after arrears have accrued.

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