Debt Charity’s Cost Of Living Warning For Landlords

One in three of the thousands of people turning to debt charities for advice are private renters. The fear is the impact of the worst cost of living squeeze for decades will lead to tenants falling behind with rents.

Leading debt advice charity Stepchange 35 per cent of their cases are private tenants, which is growing daily.

And the figures are expected to soar dramatically after the massive increase in energy bills and the government’s Health and Social Care Levy take effect later this month.

The latest data from Stepchange, which covers last year, reveals that many renters were already struggling financially even before the cost-of-living increase.

Thousands of renters in debt

The charity reports 483,247 new cases for last year - with just over 161,000 pleas for help coming from private renters. The report also observes the number of private renters contacting them is increasing.

The charity’s annual report says: “Additionally, despite small increases in the proportion of clients in electricity arrears, and a rise in clients citing an increase in the cost of living as a reason for debt, the impact of the rise in energy prices and inflation had not yet substantially affected new clients in 2021.

“However, the 2021 data highlights the difficult financial situations that many households across the UK already face.

“Increases in the proportion of clients with children, single parents and renters is a cause for concern, set against rising average expenditure, arrears levels and energy price rises.”

Sadly, many households already have crippling debt, increasing year by year.

Breaking down the debt

In 2019, 21 per cent of callers wanted help with rent arrears averaging £1,084.

This debt rose to £1,463 for 27 per cent of callers in 2020, and last year, average arrears reached £1,676, although the number of callers dropped slightly to 25 per cent.

The same problem extended to other debts:

 % of clients in arrearsAverage arrears% of clients in arrearsAverage arrears% of clients in arrearsAverage arrears
Council Tax30%£1,14636%£1,29237%£1,578
TV licence8%£1037%£924%£102

Source: StepChange

 The report points out that despite the number of tenants in rent arrears falling, the average debt surged by £213.

This was compounded by coronavirus pandemic measures banning evictions and lengthening notice periods for landlords.

Besides the squeeze on day-to-day living costs, many tenants also saw other debts rise:

Debt201920202021Average new client debt
Credit card69%67%66%£6,853
Personal loan48%52%49%£7,503
Store card13%14%12%£1,146
Payday loan17%13%11%£1,376

Source: StepChange

Negative budget worries

Other concerns voiced by the report are the number of Stepchange clients with negative budgets before the energy price cap rises and the increase in national insurance contributions. A negative budget starts a month without enough money to pay bills and debts.

The data also revealed that 59 per cent of clients claimed at least one benefit, with 35 per cent on universal credit and six per cent receiving housing benefits.

People blamed their debt mainly on failing to control their spending (19 per cent). Other common reasons for a rising debt included losing a job, not working or a cut to income or benefits.

Richard Lane, director of external affairs at StepChange, said: “It’s impossible to look at the characteristics of our clients and their debts in 2021 and not conclude that more help is needed. When so many people are already struggling to make ends meet, a steep rise in the cost of living means debt becomes inevitable for many. Debt advice services this year will be vital to help people navigate their best options for managing a tricky situation – but the Government needs to implement better structural support, too.

Priority bill arrears are more common

“With arrears on priority bills becoming more common, 2022 is going to be a tough year for many, and not just because of energy prices. We can see that the financial impact of the Covid pandemic was still being felt among many of our clients last year, and this is now being exacerbated by cost of living pressures. If things go on as they are, we could see the proportion of our clients who have a negative budget rise from around a quarter to more like a half.

“The numbers speak for themselves. To avoid a prolonged hangover of household debt problems that will hamper society and the economy for years, the Government needs to take additional steps. A start would be central and local government pausing deductions and halting debt enforcement and the use of bailiffs where households are vulnerable and unable to pay. Government will also need to provide more targeted support this year to help the most financially vulnerable households bridge the gap between their essential costs and their incomes.”

View Related Handbook Page

Preventing, Controlling and Recovering Rent Arrears

The tenant's responsibility is to make sure rent is paid in full, on time and in the manner agreed in the tenancy agreement.