Housing associations around the UK are becoming worried about the fact that more tenants are falling into rent arrears.
There are also concerns about the welfare reforms due to take effect in April, as landlords believe that circumstances will worsen, particularly as many social housing tenants will receive less housing benefit.
Rent guarantee insurance can cover landlords if their tenants fall into arrears. However, housing associations can house thousands of tenants, which could lead to landlords finding a policy that covers all of their properties difficult.
Concerns as More Tenants Fall into Rent Arrears
The Rhondda Taf Citizens Advice Bureau housing association in Wales claimed to have seen a 165% rise in rent arrears during the present financial year.1 And Chief Executive Erika Helps thinks that this will only get worse.
On BBC Wales’ Sunday Politics show, Helps said: “We’ve seen a really significant increase in people coming to us with rent arrears and obviously that’s given us big cause for concern as the welfare reform changes are starting to impact more people who are going to see themselves struggling to pay their rent in the future.
“We’re going to see a lot more people coming to us with financial difficulties, needing help in budgeting and managing their benefits in the future.”1
Nick Bennett, Chief Executive of Community Housing Cymru, also says: “When it comes to the housing association model, rent is the income stream which helps generate the income to service the debt that we borrow; the £1.5bn we borrow to increase the supply of affordable housing in Wales.
“The housing association model has been probably the most successful public private partnership in Western Europe and these changes really do threaten the viability of that model.”1
Despite this, a spokesperson for the Department of Work and Pensions has defended the reforms, particularly the debateable bedroom tax. They say: “Our reforms are not about making people homeless. They’re about restoring fairness to a system that has been spiralling out of control.
“It’s right that tenants in social housing, who are living in homes that are larger than their needs, make a contribution towards their rent or move to more appropriately sized accommodation, and this is exactly what people renting in the private sector do.”1