Affordable interest-free loans might mitigate homelessness and potentially save local authorities millions, suggests a recent research report.
In a bid to combat the rising homelessness crisis in Britain, a new study proposes a novel solution: a grant providing 0% interest loans to families at risk of eviction. The study, published by Taylor & Francis Group, suggests that this system could help prevent further additions to the homeless crisis while saving local authorities money.
The study, conducted in Lewisham, one of the most deprived local authorities in England, details a scheme introduced in 2010 by Lewisham Council and Lewisham Plus Credit Union. The scheme has saved over 300 families from eviction and saved the authority £1 million.
The scheme protected recipients from homelessness by helping them address their short-term financial problems and opened up loans and savings facilities to them. By providing access to essential financial services, the scheme tackles financial and social exclusion.
Credit unions, according to the study, are best placed to administer such loans. They could play an important role in preventing further additions to the homeless crisis in the UK, while saving local authorities money in the process. However, such schemes need to be underwritten by local authorities or central government to avoid credit unions carrying the burden of loss if people on low incomes are not able to repay the loans.
In Britain, social housing providers are not in a position to establish independent means to enhance the financial security of their tenants. Many tenants struggling to pay rent are often forced to turn to commercial payday lenders, who offer loans at extremely high interest rates. This new scheme offers a more sustainable and affordable alternative.
Professor Lee, one of the study's authors, suggests that the homeless prevention loans scheme could be beneficial if rolled out by other credit unions further afield. The study indicates that this could be a way forward for other local authorities to work with social housing providers.
For more information, interviews, or a copy of the study, please contact Professor Bill Lee or Simon Wesson at the provided email addresses and phone numbers. Taylor & Francis Group, a publisher of scholarly journals, books, ebooks, and reference works spanning all areas of Humanities, Social Sciences, Behavioural Sciences, Science, and Technology and Medicine, has offices in various locations worldwide, including Oxford, New York, Philadelphia, Boca Raton, Boston, Melbourne, Singapore, Beijing, Tokyo, Stockholm, New Delhi, and Cape Town.
The author proposing this zero-percent interest credit system for families at high risk of eviction to reduce homelessness in the UK is Katharina Pistor. The study's findings highlight the potential of this novel approach to address the homeless crisis in the UK, benefiting both families and local authorities financially. The scheme not only saves families from eviction but also saves the authority costs associated with providing temporary accommodation. Additionally, it benefits housing associations and landlords financially by receiving rent that would otherwise not have been paid and saving on re-letting expenses, possible repair costs, and a void period in rental income.
