According to a survey conducted by the Office for National Statistics in June, more than 12 million people in the UK have taken a financial hit due to coronavirus. Redundancies and unemployment are on the rise, with many of the self-employed missing out on government support, and low-paid furloughed workers struggling to make ends meet on a reduced rate of pay. As a result, household bills are becoming increasingly hard to manage, and personal finances are becoming strained. If this applies to you, it may be helpful to know what options are available to help with finances during COVID, and how to navigate the schemes introduced by the government over the pandemic.
Redundancies are currently accelerating “at the fastest rate on record” per the Guardian, and a recent report conducted by independent think-tank The Resolution Foundation found ethnic minority workers and young people have been the most affected. According to their report, one in five BAME workers and a similar number of young people have lost their jobs due to the pandemic. Unemployment charities such as Smart Works, Turn2Us, and Springboard, are just some of the dozens of national organisations helping those affected by giving support, advice, and donations.
Mortgage payment holidays
In March, the government introduced three-month mortgage payment holidays for those who needed them. The deadline to apply for that is Oct. 31.
However, as consumer site Which? writes, after Oct. 31 "banks will be expected to offer tailored support to those still in financial difficulty." If you've taken a payment holiday since the scheme was introduced in March and its come to an end, "you will be able to ask to extend your payment holiday for up to another three months, provided you do this" before the October deadline per Money Saving Expert.
If you have come to the end of your three months and are still concerned, your lender will be expected to assess your circumstances and agree on a manageable way for you to make up the deferred payment.
Mortgage payment holidays are available “to any homeowners who are concerned about their ability to meet mortgage repayments,” and you don’t need to have contracted or tested positive for COVID to apply for one. All you need to do is contact your bank directly either online or over the phone.
You will have to pay more interest if you do decide to take a payment holiday, but your credit score will be protected. Once it’s up “your lender will contact you to assess your circumstances and agree on a manageable way for you to make up the deferred payments” per the consumer site.
What does this mean for renters?
Unfortunately, it is at the discretion of your landlord to decide how and when rent is paid during this period. The mortgage payment holiday is available to landlords, but only if they “are struggling to make their payments because their tenants are unable to pay part or all of their rent,” as the National Residential Landlords Association (NRLA)’s chief executive Ben Beadle told insurance site Simply Business. "This is not a green light to tenants everywhere to stop paying their rent."
It’s also worth noting that if you receive an eviction notice, the minimum notice of eviction period has been extended to six months until the end of March 2021 due to the pandemic. Previously, it was a minimum of 28 days, according to the Money Advice Service.
In March the government introduced a £500 million “hardship fund” to provide council tax relief for vulnerable households. According to the Money Advice Service, some councils will be “offering help including allowing arrears to be paid over the rest of the year and deferring payments until a later date.” Each local council has its own scheme in place, so you will need to speak to them directly if you are struggling to pay you council tax.
Energy regulator Ofgem is introducing new rules from Dec. 15 "to help vulnerable customers who struggle to pay their energy bills this winter," per BBC News. Energy suppliers must put their customers "on ‘realistic and sustainable’ repayment plans" and will be required to "offer emergency credit or extra prepayment credit to households in vulnerable circumstances."
Customers who receive benefits may also be eligible for the Fuel Direct Scheme or numerous grants offered by the government and specific suppliers. You can find more information about which benefits qualify via Citizens Advice.
Water companies in England and Wales have “also stepped-up effort to help customers” by encouraging households to contact them, per Money Saving Expert. Customers may be able to receive help through payment holidays, flexible payments, social tariffs, and paying directly from benefits or grants from charitable trusts.
Much like with mortgages, those struggling to pay monthly car finance bills can apply for a three-month payment holiday at any point Oct. 31. If you are still having financial problems after three months, you can apply for another freeze.
It is worth noting that the payment holiday will affect interest rates, but lenders should be prepared to work with you to find a reasonable repayment agreement. In addition, vehicles cannot be repossessed by lenders before Oct. 31.
Food banks can still legally operate regardless of local restrictions, provided they “follow social distancing rules because this work qualifies staff and volunteers as key workers ‘caring for the vulnerable’,” per food charity the Trussel Trust.
Pressure is continually mounting for the government to extend the free school meal scheme further, especially since the government voted the latest appeal down. The thinktank Food Foundation estimates that 900,000 children have been registered for free school meals since the pandemic began.
While the future remains uncertain as to whether this scheme will continue into half term, you can see if your child is eligible for them through gov.uk.
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