There are over 340,000 private renters in Scotland, while the Department for Work and Pensions has warned that new benefit claimants are likely to receive less money than they had anticipated, and not as quickly as they had hoped.
Many campaign groups had been hoping for an accelerated universal credit application process to help alleviate the pressure families found themselves under after the coronavirus outbreak forced businesses to close and people to stay at home as part of the lockdown measures.
Speaking at a press briefing, Universal Credit director general Neil Couling said: “If you play about with the architecture of Universal Credit you won’t be able to pay the vast millions we have to pay every month.”
Exact projections are expected to be released at a later date but the worst is yet to come. Neil Couling added:
“Next week, that’s the really peak week. We had about 270,000 claims in the first week of the pandemic, we had 540,000 roughly in the second week, then about 380,000, and last week was about 220,000. So that’s the kind of mountain we’ve got to go up.”
Universal Credit Housing Benefits Shortfall
For private renters in Scotland, affected by the Coronavirus pandemic The housing element of the benefit only covers the lowest third of market rents in an area, meaning those paying average rents will face a shortfall.
In the Greater Glasgow area, the median monthly rate for a 2-bedroom flat is £750 but the Local Housing Allowance rate (LHA) is £648. In the Edinburgh area the equivalent average for Lothian is £900 per month, with an LHA rate of £822.73.
Shelter Scotland is calling for the Government to increase housing benefit so that it can cover the average cost of local rents.
Assistant director of Shelter Scotland, Gordon MacRae, speaking to STV News advised that:
“Thousands of renters will be in dire straits further down the line without more support from the UK Government.”
“As renters lose their jobs and see their incomes hit, many will have to rely on the welfare safety net for the first time.”
As part of the Coronavirus (Scotland) Act 2020 passed recently, the Scottish Government has changed the law to offer greater protection against eviction due to having rent arrears.
However, these measures only postpone payment of those arrears and is not the same as a mortgage payment break.
Post Coronavirus Recession Fears
While it’s true that there is greater protection against eviction for private renters and the legal changes will buy time for those individuals to find monies to pay their landlords, post-pandemic fears of a global recession loom.
A stark warning from the IMF predicts that we’ll see the worst recession since the great depression ultimately resulting in job losses and Universal Credit payments lasting longer than originally forecast.
Tourism, retail, hospitality and leisure will continue to be vulnerable throughout 2020 and 2021 meaning new claimants in these sectors could be hit hardest.
Women and Under 25s Hardest Hit
Recent research into the financial impact of the coronavirus outbreak has found that women, low-income earners and workers under the age of 25 may be the hardest hit by the Coronavirus crisis.
The Institute for Fiscal Studies reported ‘Sector shutdowns during the coronavirus crisis: which workers are most exposed?’ and advised on the numbers behind those sectors that have faced mass closures in recent times, including Tourism, retail, hospitality, childcare and leisure.
I’m worried about my unaffordable debt, what should I do?
If you’re worried about your ability to pay off your private rent arrears, mortgage or any other priority debts due to having unaffordable, unsecured debts including credit card debts, you should seek expert debt advice.
During these difficult times your priorities should always be – Shelter, Utilities and Food. Most credit cards, loans and other lending sources should now grant you a loan payment break without affecting your credit.
Our team of debt specialists at Trust Deed Scotland® have helped over 20,000 people in Scotland with their debt problems. Our expert, non-judgemental advice is personalised to your situation.
To get started, give us a call on 0141 221 0999 or find what Scottish debt management solutions are open to you. Try our Trust Deed Wizard®