Tenants falling behind on rent and now also debts

Mostly due to the ever increasing cost of rental properties across the UK, and particularly in London, there has been an increasing number of households falling into arrears on their credit card and other debts. So not only are people have challenges in paying their rent on time in this tight housing market, now adding in these hardships on their debts, the outlook is not looking good for many tenants.

Tenants across the UK have had an increase in their rents that are in the mid single digit per cent according to the Office for National Statistics. Properties now cost £744 a month in the least expensive cities, and the average rent is over £1,500 in London. The annual increases have no end in sight too. Combine that with an average household debt of £11,000, the problem is a big one.

The increase in these rent payments due from tenants are growing faster than wages, with no relief in site due to the short supply of private properties in the housing market as well as cut backs in benefits. Landlords also expected to put people into further debt by increasing rents even more due to the stamp duty rules and also the taxation of buy-to-let properties.

Increase in requests to charities

Over the last few years, there has been an almost 150% increase in the number or renters seeking advice from StepChange. The calls are coming from people of all incomes and backgrounds. This is an incredible increase, especially when considering how the unemployment rate has come down about 2-3%. So more UK households have a job, but they are still not only struggling with keeping up with their rent, but now they are falling into other debts.

The average amount owed to different creditors in now almost £11,000. This includes payday loans, rent arrears, car loans, and other debts. As we enter 2016, this amount owed in now a record amount. With rents continuing to increase faster than the average families wage, the problem may just continue to get worse during 2016 and following years.

StepChange has had about a 150% increase in the number of callers seeking advice, and the other organisation National Debtline has had an even bigger increase. They have had a 200% increase in the number of people calling their debt advice line that are also now in rent arrears. So the outlook is not good for any of these charities and the number of calls coming in. There are other ways to get help with arrears on debts though, as assistance can come from many organisations or programmes.

The amount of money these callers have is very limited. Most people are living cheque to cheque. Those individuals who rent their home over only £1,000 in savings available to them. This means that if they miss a week a work due to a illness, then they may fall further behind on their debts. Some are even getting evicted.

With rents increase, and most tenants already owing over £1o,000 to their lenders, the outlook on trying to stop homelessness across the UK will be challenging.