Those who are paying rent are more likely to be in arrears than people who are paying a mortgage, according to a recent survey. The cost of rent is rising faster than our wages, leaving many people unable to meet their commitments.
So, how to save while renting? There are plenty of options on how to save your money. One of the methods is to reduce your outgoings. You could keep track of your daily expenses and thereby save up.
During 2018 the CCCS (Consumer Credit Counselling Service) experienced a 27% rise in pleas for help from those who were struggling to pay the rent. There were over 10,000 people contacting them about rent arrears, which is a very worrying figure.
The CCCS found that on average their clients were 760 in arrears. Those in council accommodation were an average of 622 behind in rent payments while people renting privately were typically 924 in arrears.
This state of affairs seems to reflect the fact that private landlords are charging more rent than ever before as the demand for rented accommodation soars. In an effort to avoid paying such high rents, people are looking into more affordable property investing options (for example, refer to this blog here that talks about HMO Manchester) that they can choose from. With fewer people able to get a mortgage it means there is a very crowded rental market, tempting many landlords to charge more. With the recent increase in the interest rates charged on mortgages by major lenders such as Halifax, there has also been another incentive for putting rental payments up.
In one month alone last year, there was a rise in rent of 2.1% which left the average tenant 27 a month worse-off. This put up the average rent in England and Wales to 713 a month; rent in London rose to an eye-watering 1,025. This was back in August 2011, but rents have continued to rise since then, which seems to have a direct correlation with rent arrears increasing during 2011 as the housing crisis starts to bite.
Delroy Corinaldi of CCCS told the press, “A very large number of people are struggling to keep up with their rent payments – and with rents near record highs, the problem is getting worse, not better.”
The CCCS blames rising rents that are going up faster than the nation’s wages, leading many people into serious debt problems. More young people are struggling to get a mortgage, which means more people renting homes at a time when wages and unemployment levels are stagnating. Without these factors improving we can expect to see more people seeking debt solutions such as consolidation loans, IVAs or even bankruptcy.
The outcomes of missing rent payments are obvious: you could be evicted from your home. However, there are now other consequences to missing rent; during 2012, the UK’s three major credit agencies (Experian, Equifax and Call Credit) will start adding your rent payments to your credit history. This means that any missed payments now could have an adverse effect on getting credit in the future. For private tenants this is not a big worry for now but expect lots of larger landlords to hand over information to the credit agencies very soon.
If you pay your rent on time then you don’t need to worry. This information may actually help you out in the long term as it shows you can pay your way. Although, as the CCCS research has shown, renting history becoming a part of our credit files would be bad news for many of us.
It seems that the rent arrears problem will not go away until the housing market calms down and the jobs market perks up. There are likely to be many more families falling behind with rent and getting into serious debt through the rest of 2020.