Almost half a million people across the UK have fallen behind on rent or mortgage payments as a result of the coronavirus pandemic, reports the Resolution Foundation.
The Resolution Foundation is a UK think-tank that is focused on improving the living standards of those on low-to-middle incomes.
Founded in 2005, the Foundation’s established work programme includes incomes and inequality; jobs, skills and pay; housing, wealth and debt; tax and welfare; public finances and the economy.
The study into rent arrears found that as many as 450,000 out of an estimated 750,000 people in arrears on housing payments and reporting on the findings, Lindsay Judge a Senior Research and Policy Analyst who leads on housing, advised that many families had suffered ‘huge hits’ to their household earnings and that few have savings to fall back on.
300,000 people are thought to have dependent children.
“To make matters worse, measures that could ease the pressure, such as discretionary housing payments from local authorities and negotiated rent reductions from landlords, are not getting through to those that need them.”
The Resolution Foundation added: “Both benefit cuts and the end of furlough are pencilled in for the spring, either of which will strain family incomes further.
Likewise, unemployment looks set to rise, rather than fall, through 2021, potentially driving up arrears further still.”
Trust Deed Scotland said “We speak to hundreds of people every month and most have voiced concerns about their unaffordable debts which typically include the likes of credit cards, catalogues and unsecured loan debt.
However, with a number of people having been made redundant in the last year, or who are currently furloughed as part of the Job Retention Scheme – we’ve seen many instances of social and private tenants not being able to afford the repayment of their rent.
While there is currently a ban on evictions in Scotland, we’re concerned about the longer-term impact to those individuals’ finances caused by building up rent arrears, as well as other debts, with no clear end in sight.
As a result of this, many are falling into a cycle of debt where they are using credit to pay credit and incurring further debt to pay for general living expenses, including priority bills.
If you are struggling with unaffordable debt and have dependent children – we also urge you to apply for the School Age Payment award of £250 before the deadline ends on 28th February.
The one-off £250 Payment is currently open to families with a child born between 1 March 2015 and 29 February 2016. It can be used for anything from a warm coat to books and toys.”
Support for Scottish tenants with Rent Arrears Debt?
In Scotland, increased support for Scottish tenants in danger of developing rent arrears debt was introduced in December 2020 in the shape of a government-funded Tenant Hardship Loan Fund.
The government have set aside £10m for the Tenant Hardship Loan Fund, which is an interest-free loan and is designed to help people who have had their finances or employment impacted by the coronavirus pandemic and do not have other means of housing support.
Loans are available for private and social tenants up to a maximum of nine months’ rent costs covering rent arrears and future rent, where those arrears have arisen since 1 January 2020. However, the tenant hardship loan fund will not be available where a tenant had rent arrears before this date.
The Tenant Hardship Loan can include up to a maximum of three months of future rent payments as part of the nine-month total.
The lending arrangement provides an additional short-term offer that supports tenants to manage rent arrears and helps them to come back into paying their rent.
Loan repayments under the tenant hardship loan scheme will be deferred for six months as standard and repaid over a five-year period. The Scottish Government hopes that this helps solve any issues with the continuing uncertainty around the impact of the Coronavirus pandemic.
However, as part of the Scottish Government’s commitment to responsible lending, the Tenant Hardship Loan Fund offers will be subject to an affordability assessment. The affordability assessment looks at the applicant’s incomings and outgoings to check whether the applicant has enough surplus income, after other costs, to make the loan payments.
Please note: Applications for the Tenant Hardship Loan Fund were discontinued for new applications in December 2021.
Can I include Rent Arrears Debt in a Trust Deed?
The legal position is that all rent arrears should be included in your Trust Deed. However, to avoid any issues with your landlord, especially if you are a private tenant, then you should take advice before considering entering into a Trust Deed whilst you have rent arrears.
Rent Arrears Debt and the Debt Arrangement Scheme
If you have build up rent arrears debt, you may be able to apply for a Debt Payment Programme (DPP) under the Debt Arrangement Scheme (DAS).
A DPP, which is a formal debt solution, will give you time to pay off your rent arrears debt at a rate you can afford, and include all other unaffordable, unsecured debts that you are struggling to afford such as credit cards, unsecured loans and council tax arrears.
In addition to being able to include your rent arrears debt and credit card debts or other debts that you owe – any interest and charges on those debts are legally frozen, and if you’re receiving distressing telephone calls, text messages and letters threatening you with visits from Sheriff Officers – you can reduce and eventually stop this type of contact with an approved Debt Payment Programme.
The Debt Arrangement Scheme has risks and benefits just like Protected Trust Deeds which have advantages and disadvantages. The Minimal Asset Process route to Sequestration may also be a suitable formal solution for people struggling with unaffordable debt.
In order to find out what your options may be suitable for you, Trust Deed Scotland recommends talking to an experienced debt advisor and seeking tailored debt advice, based on your situation.
How to get Scottish Debt Advice today
As a leading provider of formal Scottish debt solutions including Trust Deeds, and the Debt Arrangement Scheme, our experienced debt advice team are able to work with you and offer tailored debt advice that puts you at the heart of the decision-making process.