Financial Woes Persist for UK Renters in 2024

Interest rates and inflation may have dropped, but millions of renters are still struggling to pay their bills, says the UK’s financial watchdog.

Renters, those living in the North East, people from minority ethnic backgrounds and single-parent families were pinpointed as the groups most likely to have money troubles in a cost of living survey by the Financial Conduct Authority.

The research shows that 7.4 million people could not pay their bills or repay credit cards and loans in January. - an improvement on the 10.9 million in the same position a year earlier, but still higher than the 5.8 million trying to make ends meet in February 2020, when the cost of living squeeze started.

The data showed that the recent surge in the cost of living hit the country’s 8.6 million renters the hardest.  Around 4 million rent privately, while the rest live in social housing.

Around half of renters say they can’t cope or have difficulties managing their finances, compared to a quarter of mortgage borrowers and 28 per cent of the general population.

Tenants prioritise rent payments

Some 62 per cent of renters saw their rents rise in the past year. Just over one in four had fallen behind on at least one bill in the past six months, compared to 11 per cent of the general population. However, only 7 per cent missed a rent payment, demonstrating how they prioritise paying for their home above other expenses.

Mortgage payers weathered the cost of living storm better than renters.

Homeowners missing a mortgage repayment dropped from 29 per cent in January 2023 to 24 per cent this year. Although only 1.7 per cent had missed a mortgage repayment since June last year, this was 0.6 per cent up on last January’s figure of 1.1 per cent.

FCA executive director of consumers and competition Sheldon Mill said: “Our research shows many people are still struggling with their bills, though it is encouraging to see some benefitting from the available help.”

One in three renters in arrears

Data from Uswitch shows that just over a third of private tenants were in rent arrears at the end of Q2 2023 - around 1.3 million of the country’s 4.1 million privately rented properties.

Here is the Uswitch data showing the number of private renters in arrears since Q2 2017:

a third of private tenants were in rent arrears at the end of Q2 2023

Since December 2021, mortgage interest rates and inflation have soared.

The Bank of England base rate has risen from 0.1 per cent to plateau at the current 5.25 per cent. The price of mortgages soared alongside the rate, adding hundreds of pounds to repayments in some cases.

Over a similar period, inflation rocketed to almost 10 per cent before falling to the current 3.8 per cent, making the cost of goods and services for consumers more expensive in shops.

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Investing in a private rented property can be achieved in a variety of ways. Sometimes landlords inherit a property that they then turn over to renting. Sometimes owners of properties become unintentional landlords because they are unable or unwilling to sell a property at the value the market currently dictates.