How to tackle debt when you're renting

Soaring rent prices have seen a significant rise in the number of renters under the age of 45 seeking support for unmanageable levels of debt.

Related topics:  Tenants,  Rent,  Debt
Property | Reporter
27th October 2023
"Many people are struggling to afford rent or find appropriate housing in today's market which can quickly put strain on budgets. In such cases, seeking debt help becomes essential for overcoming financial burdens"
- Stephanie Chapman - Creditfix

New data from personal insolvency provider, Creditfix has shown that individuals under the age of 45 now account for 73% of all Creditfix customers who are renting, up from 67% in 2021.

Rising demand and falling housing supply are driving rents higher, with ONS data showing that the median monthly rent in England between April 2022 and March 2023 was £825 – higher than any other point in history.

Rightmove data reveals a 10% surge in rental prices from July to September compared to the same period last year. In addition, new lettings in London saw average advertised rents rise to £2,627 per month, representing a significant 12.1% increase from the previous year.

The Personal Debt Index is compiled using data from over 185,000 people across the UK who have received help with their finances through an IVA with Creditfix, this data shows that the average level of debt for renters is £17,347, up from £14,549 in 2021.

Whilst this is below the national average of unsecured debt at £18,040, it still represents a steep 19% increase.

Stephanie Chapman, chief operating officer at Creditfix, said: “The rental market, especially in larger towns and cities, is driving up prices and pushing younger people into debt. The demand for rental properties is high, leading to increased competition and rising rental prices.

“Many people are struggling to afford rent or find appropriate housing in today's market which can quickly put strain on budgets. In such cases, seeking debt help becomes essential for overcoming financial burdens.

“There are formal and informal solutions available to renters to help them manage what they owe. Debt advisors will be able to offer guidance on the best solution for your circumstances, helping you set up a repayment plan that takes your living situation into consideration.”

Stephanie has provided her advice to help those who are struggling with debt and renting.

Dealing with rent arrears

If you've fallen behind on rent, known as rent arrears, it's important to act quickly. Contact your landlord and try to come to an agreement to resolve the problem. Check your tenancy agreement to determine who is responsible for the arrears.

Joint tenants are both responsible, while individual tenants are solely responsible. If taking over someone else's tenancy, you may not be responsible for their arrears.

Paying back rent arrears

Before making an agreement, assess your financial situation and create a budget. Make sure to only agree to pay back what you can afford. Consider seeking extra support through housing benefits if eligible.

Universal Credit eligibility

You may be able to arrange alternative payment arrangements with Universal Credit to help pay your rent arrears. Alternatively, deductions from Universal Credit can be made towards arrears while you focus on current rent payments.

Council housing and rent arrears

Clear arrears from previous properties before applying for council housing. Rent arrears from another property are often treated as non-priority, but court action can be taken against you.

Consequences of eviction

If rent arrears accumulate, your landlord may seek possession and evict you. They must follow a legal process and obtain a court order before evicting you. A warrant of possession is necessary for bailiffs to enforce eviction.

Stephanie concludes: “If you are worried about how rental costs are impacting your financial situation, there is a wide range of support. Organisations like Creditfix can provide debt solutions and assistance to individuals facing financial challenges. Don't hesitate to reach out for support and guidance during these difficult times.”

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