Large increase in rent arrears reported since 2007

About the only positive to be taken away from the latest buy-to-let index from LSL Property Services plc, from a tenants perspective, was that the 9.1% of late or unpaid rent was slightly below the 12-month average of 9.5%. However, this failed to contextualise rent arrears on a broad scope that truly gauges the scale of the rise of tenants financial woes. New figures released by the Money Advice Trust paint a bigger picture, and it isn’t pretty.

The number of calls handled by the charity’s National Debtline service by people in rent arrears has ballooned in the last five years. Between the months of January and August 2007, the free advice helpline received 6,064 calls from people with rent arrears. In the same period of 2012, they received 12,043 calls, just under double that of five years ago. Going back even further, the number of people calling with rent arrears in 2001 was just 1,405.

Over the last two years alone calls about rent arrears have increased by 28%, including 9% in the last 12 months. Just shy of 10% of all their calls are now about rent arrears, the highest proportion they have ever seen. This is up from 6% in 2007 and 8% in 2011.

Other figures suggest that renters are experiencing increasing financial hardship across a broader range of debt problems, with renters making up half of all calls made to the National Debtline for the first time ever.

Joanna Elson, Chief Executive of the Money Advice Trust said, “In the current environment it is clearly difficult for people to save the money for a deposit to buy a house and this has led to more people remaining in the renting market for longer. Where there is limited supply and greater demand, rising prices will always follow.

“However, rising rent prices are not only making it harder for people to save for a deposit, they’re also pushing more people in debt. This is a dangerous spiral; with increasing numbers of people entering the renting market, and fewer people leaving it, it is hard to see how the situation will improve.

“Many people’s budgets are tight already with stagnant earnings growth and inflation above the Bank of England’s two per cent target. Sharp jumps in renting costs can push individuals and households over the edge and into an unmanageable situation.

“Anyone struggling with their finances should seek free, impartial advice as soon as possible. Advice is available online through My Money Steps, over the phone at National Debtline, or face to face at your local Citizens Advice Bureau. If you are a struggling buy-to-let landlord, or if you are self-employed or the owner of a small business, you should contact Business Debtline.”

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