Tenants are ‘scraping by’ as a 3rd depend on credit score to cowl lease

A third of tenants have used some type of credit to cover the cost of their rent in the past year, new figures suggest.

It is the latest evidence of how record high rents and the cost of living crisis are taking their toll on tenants.

And it has prompted Peter Tutton, of StepChange – the debt charity that carried out the research – to describe the rental sector as ‘increasingly unaffordable’ with tenants ‘scraping by’.

A third of tenants have used some type of credit to cover the cost of their rent, according to the latest survey

He said: ‘We’ve reached a point where renting in the private rental sector is increasingly unaffordable.

‘Yet the growing scarcity of social housing means that more and more financially or otherwise vulnerable people have no choice but to do so.

‘Sky-high rents and wider cost of living pressures mean millions of private renters are scraping by or relying on credit to pay their rent.’

A total of 31 per cent of private renters have used a form of credit to ensure they can afford their rent payments in the last 12 months, up from 28 per cent in January 2024, according to the survey of more than 2,000 people.

The survey went on to reveal half of tenants have found it difficult to keep up with their bills and credit commitments in the last few months, compared to 40 per cent of all adults and 44 per cent of all mortgage holders.

Meanwhile, one in three private tenants have cut back on essential spending the last 12 months, compared to one in four adults across Britain, it revealed.

It follows the second reading of the Renters (Reform) Bill in the House of Lords.

The legislation brings about the biggest change to the private rented sector for decades.

However, many questions remain about the changes, including a timeline for the abolition of Section 21 notices, or so-called no-fault evictions.

Government data, released earlier this month, revealed 2,682 households in England were evicted as a result of Section 21 no-fault evictions between January and March – up 19 per cent in a year and the highest number in six years.

The Ministry of Justice figures showed a further 7,863 landlords in England started Section 21 proceedings against their tenants in that time period, an increase of 15 per cent in a year.

Half of tenants have found it difficult to keep up with their bills and credit commitments in the last few months

Mr Tutton added: ‘Even with the Renters (Reform) Bill, tenants are given no effective statutory protection from eviction if they do fall into problem debt.

‘While it’s important that this Bill is progressed with a clear timeline of when Section 21 will end, we’d like to see changes that would increase security for private renters, with protections from eviction that mirror those which already exist for mortgagors and social housing tenants.

‘In the long term, we need to see a commitment to making housing more affordable and a clearer plan from Government to reduce the risk of financially vulnerable tenants losing their home because of rent arrears.’

A Section 21 notice allows landlords to legally evict tenants without providing a reason for doing so, creating uncertainty for those renting the property.

However, the prospect of the abolition of the notices has raised concerned among landlords who fear they may not be able to take possession of a property when they need to.

Some landlords may decide to leave the market and sell up if the banning of Section 21 is introduced.

Official data shows the latest average rents in Britain from January 2015 to April 2024

Mr Tutton’s comments come as the Office for National Statistics revealed that the average rent in Britain increased by 8.9 per cent in the 12 months to March this year.

They reached an average of £1,293 in England, £730 in Wales and £952 in Wales. In Northern Ireland, average rents reached 10.4 per cent in the 12 months to February this year.

However, the rate of growth has slowed from a record high of 9.2 per cent in the year to March and was the first slowing of the annual inflation rate since December 2023.

North London estate agent Jeremy Leaf, said: ‘To see these issues laid bare in black and white is a bit shocking but not too much of a surprise bearing in mind what we are seeing in our offices.

‘Tenants have been struggling, particularly those looking for new accommodation. 

‘However, that has meant a larger proportion than usual have renewed existing arrangements if possible as many landlords, mindful of extended voids and the importance of keeping good tenants, have opted to kept rises in check.

‘On the bright side, if there is one, we are seeing a little more property coming on and inflation is heading in the right direction which will help stop the acceleration that we have seen in rents, particularly in the middle to latter part of last year.’

And Harriet Scanlan, of Richmond estate agents Antony Roberts, said: ‘Supply of rental stock continues to lag behind demand, ensuring that rental prices remain robust and the scales are tipped in the favour of landlords. 

‘Landlords continue to benefit from steady rental incomes and minimal-to-no void periods, despite a slight increase in properties available to rent, particularly in areas popular with commuters.’