The financial service firm Money Advice Trust (MAT) has claimed the UK risks descending into unmanageable amounts of debt because of rising rent costs.
According to the organisation, rent prices are causing debt arrears to increase at a faster rate than ever before and more and more tenants are having to turn to lenders to get by on a monthly basis.
MAT runs a national helpline, intended to offer one-to-one guidance to people who are worried about their finances. Statistics show that a total of 12.3 per cent of calls were in relation to rent arrears in 2013, compared to just 6.3 per cent three years earlier.
Paul Crayston of MAT explained that while rent prices have been on the increase amid the current housing boom, real incomes have failed to follow suit accordingly, meaning residents are finding it harder than ever to make ends meet.
He also claimed the scarcity of credit is becoming a growing problem, saying: “As credit becomes harder to access, people who used to build up large debt are now falling more quickly into rent arrears. There were people who would have been paying these kinds of debts on credit cards.”
However, the problem shows no signs of letting up, with the housing market predicted to continue its accelerated growth in the early stages of 2014.
MAT chief executive Joanna Elson revealed she is becoming increasingly concerned that rent-based arrears could become a national “crisis” if rates are not brought down in line with tenants’ incomes.
She also spoke of a worrying trend, whereby callers to the impartial helpline are admitting funding their rent through borrowing without informing their landlord.
Mr Crayston went on to stress that anyone worried about rent costs will only exacerbate the problem if they allow arrears to mount.
With more and more people paying their rent through the use of unsustainable finance, landlords are likely to increasingly look to rent guarantee insurance as a means of security.
