I have three explanations for what I think might be going on in the local authority market – but this is an area that desperately needs more research and policy changes.
Firstly, Covid and the cost of living crisis have exacerbated the problem – but this was already an underlying issue which has been growing steadily worse. Likely, the fact that benefits have been depressed for a number of years has snowballed this problem, but given local authority housing rents are amongst the lowest in the country, I am struggling to make that argument stack.
Secondly, I have questions about the local council’s collections department and their process for collecting arrears. The pattern of growth points to a systemic failure at its root cause.
This systemic failure brings me onto my third explanation for what may be happening ª paying rent directly to claimants rather than the landlord.
Prior to 2013, housing benefit was a separate payment that was paid directly to landlords. It was a system that had been in place for over three decades but the Conservatives – despite many industry warnings – pressed ahead in their belief of “responsibilisation”.
By paying the rent directly to claimants, the Government believed this would assist people to budget better and become more financially astute. There are limited studies on the impact of this, but those that have been conducted have found landlord arrears have risen markedly and many tenants have experienced difficulties.
A recent study conducted by the National Federation of ALMOs (arms-length management organisations) and the Association of Retained Council Housing has found four in five council landlords are seeing significant rises in rent arrears. Our research at The Telegraph supports these findings.
But what we want to know is: what is the Government going to do?
If we do nothing – and the current pattern continues – the rent arrears bill is on track to reach £1bn by 2034. This is not sustainable.
We already have a housing crisis at breaking point. Our research shows that local authority housing – which provides for some of the most vulnerable members of our society – will soon be plunged into an inescapable mountain of debt.
Action must be taken, and it must be taken now.
