Experts warn a debt time bomb for UK households is on its way

Fears of a Debt Time-Bomb

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Advice agencies fear explosion of calls for help

Support projects across the UK fear householders deferring rent, bills and debt payments will swamp helplines as lockdown lifts.

Nik Browne, manager at Reach, an independent housing support and advice team, said: “Numbers in to Reach have reduced since lockdown, which is worrying. We strongly suspect that people who are facing difficulties with their housing are not addressing them.”

A similar picture has been reported by advisors around the UK. Some reckon the public health message has encouraged the public to dig in and wait for the danger to pass. For people sliding into debt, however, this can be the worst advice as the problems increase over time.

A pause on evictions, alongside the furlough scheme and mortgage holidays may have provided a false sense of security. The government extended the lockdown ban on new eviction proceedings to 1st September, but by then thousands could face homelessness. The government is calling on landlords to work with tenants before taking the ultimate step.

Citizens Advice says UK consumers face a debt cliff-edge. Shockingly, they say “four million have fallen behind on rent, council tax or a telecoms bill”. Six million have missed at least one bill payment.

They also found insecure work makes matters worse. More than two in five people (43%) on zero hours contracts missed a bill payment due to coronavirus.

“We strongly advise everyone to stick to the terms of their tenancy agreement,” says Nik Browne. “This includes paying your rent on time. If somebody is unable to pay all or part of their rent, they should contact their landlord as soon as possible.

“We would also recommend discussing this with any local housing support service as they may be able to help”. Caller numbers, he said, were already starting to climb.

The Scottish Government passed an emergency law protecting tenants for up to six months after an eviction notice is raised. Tribunals will also consider the impact the coronavirus crisis has had on the tenant’s finances. (Read more here)

Citizens Advice is calling on the government to protect tenants more against evictions through legislation. It wants local councils to grant a payment holiday for council tax arrears, which often lead to action by bailiffs. It is asking Ofcom to prevent telephone/ broadband companies cutting off customers due to arrears caused by coronavirus.

More than a third of families in the UK rent from their local council, a housing association or private landlord.

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