More tenants turning to national debt line as they fail to pay the rent.

Uk landlords are facing a crisis as more companies are closing and making redundancies as debt problems in the UK are both growing and changing.

At Tenant Referencing Uk we are hearing from more and more member landlords who have done cheaper 3 point referencing and have then not taken Rent Guarantee insurance and/or lumped their cheap rent guarantee insurance in with their building and content insurance and then because of the referencing are being turned down at point of claim. Unfortunately for these landlords these deals may seem attractive because of the price but this is a dangerous game to play if you need the rent. as more policies fail to pay up than pay out. (any landlord or agent that needs advise on this matter can call us free on 0800 9994 994 free for our advise)

Many of our members are now seeing their tenants approaching the National Debtline  for advise. National Debtline is a free telephone debt advice service for people in England, Wales and Scotland. They run a debt helpline and their website offers free debt solutions including debt management plans. Naturally they are at the heart of the UK consumer debt crisis and understand better than anyone what is causing people their problems and how many people are affected.

Their latest report says that they are expecting to see the highest call levels in 5 years – demonstrating that 10 years on from the financial collapse, the UK economy is still in desperate need of help.  

However, it also shows that things have changed. 10 years ago, we (as consumers) were in a lot of debt because we were simply spending more than we could or should afford. In other words, people were living above their means with cars, phones, sofas, big houses, carpets, beauty treatments, clothes all on credit – buy now pay later was a very common phrase of the time. The solution, in hind sight was fairly simple – return (and stop buying) what you can’t afford.

 

Now the situation is more serious than that – debt is cause by “smaller but trickier debts”. In other words, we can’t even afford the basics such as council tax, water rates and rent. Debts of this kind are much more difficult to deal with because these payments are fundamental.

The report explains the trends and changes over the last 10 years saying:

“A prolonged squeeze on real wages, a changing jobs market and rising spending and borrowing have been joined by significant changes in government policy and in the regulatory environment for consumers”.

The key take-outs from the report that highlight how widespread debt problems are becoming are:

• There is a more even split of age groups contacting the non-profit organisation
• More people in rented accommodation are getting in touch for help
• There are more people on lower incomes finding themselves in need of advice
• More people than ever before are getting in touch because their “budgets are fundamentally broken”. They quite simply earn less than they need to pay out.
• Credit card debt and other consumer debts are becoming less and less the trigger for financial crisis as essential payments such as rent, and council tax are becoming the main issue that the charity is responding to.  

For landlord’s the report directly advises:

“Landlords in both the social and private rented sector should adopt a proactive approach to identifying and supporting tenants who are falling into arrears, ensuring that tenants are signposted to debt advice and other resources to prevent early repossession action”.

We also feel that it highlights the need to undertake rigorous credit checks on potential tenants to be absolutely crystal clear on whether they truly can afford to pay the rents that you are expecting. Entering into a tenancy agreement that the tenant is unable to afford will not only cause problems for the landlord of unpaid rents but also send the tenant into spiralling debts that are incredibly tricky to get out of.

 

Follow the post and have your say here TENANTS TURN TO NATIONAL DEBTLINE