A number of recent publications, including the Food Foundation (2022) and a report published last month by the House of Commons Library, have highlighted that the cost-of-living crisis is disproportionately affecting low income households. Research by Fitzpatrick et. al. (2020) suggests that tenants in the Social Rented Sector are particularly exposed to the impact of the crisis, as it has the highest proportion (60%) of households of three principal housing sectors who may be described as being ‘destitute’ (i.e., unable to afford two or more of a basket of essential items). It, therefore, does not come as a surprise that social housing tenants are finding it increasingly difficult to pay their rent and sustain their tenancies. It is vital, then, to highlight through research their experiences, which is the focus of the ‘Holding on to home’ study.
As part of its scoping phase, we interviewed 16 representatives of national and regional organisations with a stake in tenancy sustainment about the challenges facing tenants, with discussion focusing on the causes of rent arrears, as this is the main reason why tenancies fail. Organisations represented in this exercise included: national tenant and landlord bodies; relevant charities; landlords; support agencies; and, national organisations representing particular communities (women, disabled people, black and minority ethnic tenants). The challenges faced by landlords, including the introduction of a rent cap and rising costs, were also explored with stakeholders. The key insights from the interviews are presented below.
Are people of low incomes facing a tipping point?
The cost-of-living crisis is compounding financial pressures that have been building for some years. Serious concerns were expressed about the capacity of low-income households to cope financially with the ‘cost-of-living crisis’. Its full impact on rent payment rates is yet to be seen, and is a key focus of this study, but there was consensus that households will, and are already going without essentials such as heating and food: “So, they’re basically not using any energy, or barely trying to use it to the point where people are using candles to cook food. It’s really shocking” (Social justice charity). However, stakeholders also emphasised that the crisis has come after a period in which low-income household’s incomes have already been squeezed, and so should not be seen in isolation, but as compounding an already significant problem. In particular, they referenced an array of changes to the benefits system over the past decade (often collectively referred to as ‘welfare reforms’); cuts in local authority funding; and the pandemic. Stakeholders were concerned, however, that tenants affected by welfare reform may have no further headroom, or ‘financial resilience’, to accommodate the rising cost-of-living. Those subject to welfare reforms have maximised incomes and minimised spending already to accommodate these changes. The pandemic, too, was reported to have eroded the financial resilience of low-income households: “The financial resilience of these families was eroded during the pandemic which again, which means that they have less ability to cope with rising costs, in particular rising bills, energy bills” (Independent women’s group).
Uneven impact of the cost-of-living crisis and other financial stressors
Some population groups have been, and will be, disproportionately affected by the cost-of-living crisis, welfare reforms and a “hostile” benefit environment. Stakeholders pointed to ways in which certain households are disproportionately, adversely, affected by rising costs and changes to the benefits system, including: larger low-income families, including some minority ethnic groups, such as South Asian households; people who spend more time in the home; people with disabilities; women, and lone mothers in particular; and, tenants who pay for their energy using pre-paid meters.
How should we define ‘tenancy sustainment’?
In its simplest form, sustaining a tenancy involves maintaining rent payments so that tenants do not accrue arrears and risk eviction. However, the ‘perfect storm’ of the cost-of-living crisis, welfare reforms and the personal financial consequences of the pandemic, means that people’s experience of home and the conditions of their home are likely to deteriorate as households struggle to meet their basic needs. Can we say that someone is ‘sustaining their tenancy’, if, for example: They are unable to live a comfortable and happy life within their home? They are unable to cook meals due to the cost of energy? The condition of their home adversely affects their health (for example, due to being cold and damp with heating unaffordable)? Households may not be at risk of eviction due to rent arrears and so may be ‘sustaining a tenancy’ in basic terms, but if they are not “heating or eating”, as one stakeholder put it, can we really call this a successfully sustained tenancy? So, is tenancy sustainment about more than just paying the rent?
Social landlords under financial pressure
The financial pressures on households, such as the cost-of-living crisis and welfare reforms, also bear down on social landlords. The financial pressures on households that drive rent arrears and, ultimately, tenancy failure, also have an impact on social landlords. Welfare reforms, such as the introduction of direct payment of Housing Benefit to tenants and the (so-called) ‘bedroom tax’, had financial consequences for social landlords as well as individual households because of the increased risk of rent arrears. Landlords alongside their tenants are now facing higher energy costs in their offices and housing schemes, increased maintenance and materials costs for repairs, improvements and developments, and interest rate rises on borrowing, once fixed rate loans come to an end. They may also be considering staff wage increases to align with inflation. Social landlords, therefore, have a choice of whether to increase rents to generate additional revenue (impacting on rental costs for existing tenants), or absorb a large budget shortfall. However, their autonomy will be limited by the introduction of a rent cap imposed by central government – at the time of writing government was considering limiting social housing rent increases to between three and seven per cent: “One of our members said if there’s a 3% rent cap they’ll lose over £100 million over the life of the 10 year business plan…That’s the retrofit bill. So, it’s those kind of trade-offs. So, what will happen if there’s a big rent cap in amongst all the other economic uncertainties is that some organisations won’t be able to make it work” (Social landlord member body).
The importance of landlord/ tenant communications
There was a consensus amongst stakeholders that the nature and form of landlord/ tenant communications impacts on tenants’ rent (re)payment behaviour and rent arrears. They reported that: in person communication, such as face-to-face interactions (especially) and telephone calls, is more effective than automated (standardised) communications; personal communication between landlords and tenants is more effective when fewer officers are involved in the process; the deployment of ‘generic’ (‘key worker’) officers in the community facilitated landlord/ tenant communication; digital communication did not work for many tenants; and, the language used by landlords in their written communications with their tenants is important.
The issues highlighted above will be explored in depth throughout the remainder of the Holding on to home study, which runs until May 2024. The research will pay particular attention to exploring the impact of the cost-of-living crisis and other stressors on tenants, highlighting their impact on tenants’ ability to pay their rent and, critically, their well-being and physical and mental health. It will also highlight how landlords respond to the numerous challenges confronting them, not least how they reconcile rising costs, the introduction of a rent cap, and likely declining rental income as arrears rates rise, with increasing demand for their tenancy support services as more tenants find it difficult to pay their rent. More detailed discussion about the issues raised in this blog can be found in the study’s first ‘emerging insights briefing’: Perspectives on tenancy sustainment: insights from national stakeholder interviews.
More detailed discussion about the issues raised in this blog can be found in the study’s first ‘emerging insights briefing’: Perspectives on tenancy sustainment: insights from national stakeholder interviews >