Private renters are twice as likely to be in problem debt as the rest of the UK

Private tenants are now twice as likely to have problem debt amid a flurry of people struggling since the start of the year

  • More than 1.2 million renters use credit to make ends meet as costs rise
  • Private tenants struggle more than others with the affordability of housing
  • Fears the bill will cause landlords to leave the industry, contributing to housing shortages

Private renters are nearly twice as likely to have problem debt as the general population, according to a new study by charity StepChange.

Overall, 15 percent of private renters — about 1.1 million people — now have problematic debts, compared to 8 percent of the general population.

The number of private tenants with problematic debts has risen 37.5 percent this year from 800,000 people in January to 1.1 million in May.

This increase pushes the percentage of people in distress from 11 percent to 15 percent in just five months, according to the Trapped in Rent report.

Problem debt: since the beginning of this year, more private tenants have had a hard time

It found that 17 percent of renters, more than 1.2 million, use credit to make ends meet and 3.7 million have seen their rent rise in the past year.

Richard Lane, director of external affairs at StepChange, said: ‘Everyone deserves to live in a house they can call home, but this is becoming increasingly out of reach for a growing number of private tenants.

“Against the backdrop of a frenzied rental market, where bidding wars, skyrocketing deposits and rising rents are rife, those who are financially vulnerable often have no choice but to take on unaffordable, precarious, poor-quality accommodation to preserve their lives. a roof over their heads.’

The charity has called on the government to increase protections for financially and otherwise vulnerable tenants in the new Tenants Reform Act, including reinstatement of housing benefit to cover actual rent costs.

The bill will ban no-fault evictions — but StepChange says the strengthening of grounds for eviction based on arrears causes many to fall behind on their rent, leaving them vulnerable to eviction.

According to Which? while rents hit new highs.

Rents outside London rose to an average of £1,190 a month as tenants battled over a lack of properties to rent out.

Last year, more than half of tenants were asked to bid on the property they hoped to rent, with only 28 percent successful.

Debt counselor StepChange found that private tenants struggle more than others with the affordability of housing

Debt counselor StepChange found that private tenants struggle more than others with the affordability of housing

Private tenants struggle more with the affordability of their home than any other rental property.

Average monthly private rent payments were found to be nearly double those in the social sector, and 39 percent more than average mortgage payments.

Three in four private tenants say they or their families have been negatively impacted by housing problems.

This included direct effects on health, for example on chronic health problems, as well as the impact of housing insecurity and affordability problems on mental health.

However, landlords say rents have risen as demand continued to rise and they faced rising costs.

The sharp rise in mortgage rates over the past year, boosted by September’s mini-budget and successive increases in base rates, have pushed up buy-to-let mortgage prices.

At the same time, more than 70 per cent of landlords said demand had increased in every region of England and Wales, according to research from the National Residential Landlord Association (NRLA).

And the housing stock problem could get worse as more landlords leave the sector.

Polls showed that in the first three months of 2023, 33 per cent of private landlords in England and Wales said they planned to reduce the number of homes they rent out.

This is a record high ever recorded by the polling station and is higher than the 20 percent who said they plan to reduce the number of rented homes in the first three months of 2022.

What to do if you need a mortgage

Borrowers who need to find a mortgage because their current fixed-rate contract is about to expire, or because they have agreed on a home purchase, should explore their options as soon as possible.

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What if I have to borrow again?

Borrowers should compare rates and speak with a mortgage broker and be prepared to trade to secure a rate.

Anyone with a fixed-rate deal expiring in the next six to nine months should research how much it would cost them to re-mortgage now — and consider getting a new deal.

Most mortgage agreements allow fees to be added to the loan and are not charged until it is closed. By doing this, borrowers can secure a rate without paying expensive arrangement fees.

What if I buy a house?

Those with an agreed home purchase should also aim to secure rates as soon as possible so they know exactly what their monthly payments will be.

Homebuyers should be careful not to overextend themselves and be prepared for the possibility that house prices could fall from their current highs, due to higher mortgage rates limiting people’s borrowing capacity.

Compare mortgage payments

The best way to compare mortgage rates and find the right deal for you is to talk to a good real estate agent.

You can use our best mortgage interest calculator to display deals that match your home value, mortgage size, term and fixed interest needs.

However, bear in mind that rates can change quickly, so if you need a mortgage it’s advice to compare rates and then speak to an estate agent as soon as possible so they can help you find the right one mortgage for you.

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