The Bank of England interest rate has risen steeply over the last 20 months, from 0.1% in December 2021 to 5.25% in August 2023, driven in part by the former prime minister Liz Truss’ disastrous ‘mini-budget’ last year. This is having a profoundly negative impact on homes in the UK which are owned with a mortgage.
Some buy-to-let landlords whose fixed-rate deal has come to an end have seen huge hikes in their mortgage repayments, forcing many to put up their rents to meet the shortfall. This has been devastating for tenants who have had to choose between paying around £100 more in rent each month or facing eviction.
The Liberal Democrats have called on the government to provide £300 a month to mortgage holders struggling to meet their higher mortgage repayments. The chancellor Jeremy Hunt has resisted the call, arguing that to do so would lead to higher inflation. At the same time, anti-poverty campaigners have been imploring him to increase the Local Housing Allowance (LHA) rates which have been frozen for the last three years, despite rocketing rents and an enduring cost-of-living crisis.
They argue that a rise to the LHA would allow tenants who qualify for Housing Benefit but rent their home in the private sector to keep up with the rent rise, or to look for a new home. As it is, rising rents and interest rates, combined with the LHA freeze, have resulted in tens of thousands of tenants losing their homes and finding it increasing difficult to secure another because the LHA does not cover the true cost of renting in the private rental sector.
The government’s lack of intervention has led to a dramatic increase in homelessness and rough sleeping. The UK recently recorded the highest number of households in temporary accommodation since records began and has witnessed a 26% rise in the number of people sleeping rough.
The government’s response to the rising tide in homelessness has been to set up the Housing Loss Prevention Advice Service, providing tenants and homeowners, regardless of their income, with ‘timely’ advice to help stave off an eviction or repossession. In the unfortunate event that a case should reach the court proceeding stage, the service also provides legal representation.
The biggest flaw with this initiative is that it can only be accessed once a tenant or homeowner has received notice from their landlord or bank that it is about start possession proceedings. Another weakness is that there are not enough legal aid practitioners to do the work after years of legal aid cutbacks.
More than half of law centres in England and Wales have closed in the last 10 years. In 2013/14, there were 94. Today, there are 40. In July, Lambeth Law Centre shut up shop. As Lubna Shuja, president of the Law Society, says: “Without easy access to providers, the scheme does little to help people at risk of losing their homes. And with increasing demand, the few providers remaining will not have the capacity to take on new clients.”
