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Reducing PRS Rental Prices Could Kick Start The UK Economy

Reducing PRS Rental Prices Could Kick Start The UK Economy

Whilst the UK Government have presented the nation with the idea of building more affordable homes in the social sector and promises of further regulation, licensing and reform of the private rented sector, there is still a case that lower rental prices are vital for economic recovery.

Pete Jefferys, part of the policy team at Shelter stated that lower PRS rent is vital for the UK’s economic recovery, if average PRS rents in the UK had risen in line with the rate of inflation since the year 2000, rather than well above, then tenants would have an extra £8 Billion (GBP) per year of disposable income.

Increasing rents for private rental sector tenants are beginning to become a sensitive political issue, especially in areas of high demand including London and the South East.

Private sector tenants are trapped between the expense of renting and unobtainable or unaffordable mortgages, with banks and mortgage lenders tightening lending criteria and demanding larger deposits for property purchases than they were prior to the financial crisis.

While this trap is frustrating for those who want to buy and devastating for low-income families with few other options, it may also be having an impact on the economic recovery of the UK.

Tenants renting property in the private rental sector are increasingly paying more in housing costs than those buying a property with a mortgage.

For some low-income tenant renters, the proportion of their wage going towards rent can be over 70%, especially in London.

Lower PRS Rent Vital To UK Economy

Lower PRS Rent Vital To UK Economy

The homeless charity, Shelter say they have collected evidence that increasing housing costs and financial uncertainties mean that tenants are attempting to reduce spending on many consumer goods and services, and due to falling household incomes, increasing numbers of tenants are being forced to use high cost credit to make up any rental shortfall, incurring high repayment charges and eating up even more disposable income.

The cumulative gap between rental costs and wages was growing in London before the 2007/8 financial crisis but now in 2012 it has grown even wider.

There are 8.5 Million tenants renting property in the UK, in London tenants pay on average, between 42 – 46% of their income on rent and economists say that there is a strong case that a lot of potential consumer spending is being lost and that the UK faces a demand crisis because there isn’t enough being spent on British products in shops to get people back into work.

Many landlords rent out just one or two properties and are using the rental income to pay off mortgages and earn a small yield. The result is that the amount of money being paid in rent is financing mortgage debt and not being re-circulated into the country’s economy. If banks were re-lending this money, again it might not be a problem. But, as we’re constantly hearing – bank lending has dropped massively since 2008.

Even if all rent went straight into the pockets of landlords there would still be a case that this is reducing spending in the economy. Higher earners spend proportionately less of their income compared to lower earners and on average landlords have higher incomes.

If average PRS rents in the UK had risen in line with the rate of inflation since the start of the new millennia rather than well above it, renters would have more than *£2,000 (GBP) extra per household per year

That would have meant far more going directly into the pockets of those on a lower income to be spent within the UK economy than the proposed VAT cut (offered by the Labour opposition and would cost the Treasury £12 Billion (GBP) per year).

High price rents in the PRS increase the housing benefit bill, which currently costs the government more than £20 Billion (GBP) per year, having doubled over the last decade.

The balance of UK Government spending on housing has shifted away from house building to covering housing benefits.

If 8% of private rental sector tenants moved to more affordable social homes, the UK Government would save up to £200 Million (GBP) per year.

Building more affordable council houses has the advantage of reducing pressure on the private rented sector and would increase spending power dramatically for those families who are in social rented properties.

A recent Shelter report stated the case for reform of the UK private rental sector proposing five year, inflation linked tenancies with two month break clauses for tenants.

The benefits of the Shelter proposition include stability for tenant families, more disposable income over the long term and are even supposed to be beneficial for many landlords’ business models.

Building more affordable social homes and reform of the private rented sector would help millions of tenants, currently struggling with the third highest housing costs in Europe, it would also put enough cash back into people’s pockets to sustain an increase in consumer demand that is not reliant on personal debt nor expensive tax cuts.

*3.62 million tenant households in 2010/11 paid on average £95 rent per week, if the median of £78 per week average rent from 2000/01 had risen with CPI inflation, rather than the actual 2010/11 median figure of £137 per week. Across the UK this equates to £7.9 Billion (GBP) extra rent paid per year, so on average a renting family would have £42 per week extra disposable income, or £2,184 (GBP) per year.

(*Figures from the English Housing Survey and Office for National Statistics).

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UK Has 3rd Highest Housing Costs In Europe

UK Has 3rd Highest Housing Costs In Europe

New data released by the European Union has been highlighted by the housing and homeless charity Shelter, showing that the UK is the third worst off country in Europe when it comes to housing costs behind Denmark and Greece.

The EU says that 16.5% of people in the UK are financially burdened by housing costs, spending more than 40% of their income on rent or mortgage payments and other property related expenses.

Chief Executive of Shelter, Campbell Robb, said: “These figures are the evidence that the UK housing market is deeply dysfunctional. With so many families spending huge amounts of their income on their rent or mortgage, people will be making daily trade-offs between food bills, filling the car tank with petrol, and paying their housing costs. And this is not set to get better any time soon. While the situation is bleak at the moment, a succession of governments failing to provide much-needed affordable homes means that the future facing our children and our children’s children is only set to get worse. Housing is the largest monthly cost for most people, yet the affordability of housing is not getting the same attention as the monthly costs of other essentials such as food or fuel. We believe all political parties must recognise that solving our housing crisis is as fundamental as health and education.”

Landlords of Buy-To-Let properties are urged to set realistic rental prices for their properties but even they have high running costs to pay for as well as the mortgage.

However, Private Rented Sector (PRS) landlords are in a position to help struggling tenants by offering them a safety net when it comes to being able to pay the rent.

Rent Guarantee Insurance offered by Legal 4 Landlords can ensure that the rental income can continue to be paid should the tenants financial or employment circumstances change.

Click Here To Find Out More

The much debated north-south divide could hardly be more apparent than when it comes to housing. It’s widely accepted that England has an almost two-speed housing market: in the south east, real estate is as much an investment as a home, creating a frenzy of competition between investors, foreign buyers, locals and commuters that keep house prices high. Houses further north can be a fraction of the cost, with prices dropping, more homes standing empty and high levels of housing debt.

The natural conclusion might be that the lower prices mean that housing in the north is more affordable. In reality, affordability is about the money you take home each month versus the cost of your home. The money in your pocket is most often determined by the local jobs market and average wages, which can be totally out of step with the cost of housing in a particular region. On a more local scale again, the picture can become even more complicated – a recent IPPR report into housing in Bradford, for example, found that those in the poorest and cheapest areas of the city spent proportionately more of their income on rent.

Shelter has just released new research showing where the nation’s repossession ‘hotspots’ are – those areas where the highest proportions of homeowners are at serious risk of losing their homes. We find huge variation across the country, with the greatest number of hotspots clustering around the North West and the North East, and a couple of stand out areas in the south, including Barking and Dagenham, Lewisham and Thurrock.

Click here to explore the interactive map of hotspots from Shelter.

Of the top ten hotspots nationally, five are in the north west. What does this tell us? Firstly, the cluster of repossession risk hotspots in the north reflects economic conditions, to some extent. Home repossessions are often triggered by job loss or other loss of income, and our analysis shows that unemployment is higher, and has risen faster, in the areas where risk of repossession is highest.

More recently this has been exacerbated by the ongoing squeeze on household finances. Housing costs take up a large chunk of most people’s take-home home pay. We know that many families have made huge sacrifices – including cutting back on food and fuel – to keep up their mortgage payments. But ultimately if your pay isn’t rising and the cost of everything else is, it’s difficult to keep budgets on track.

The high cost of housing affects all of us. While prices might be most out of control in London, Shelter’s research clearly shows that the northern market is dysfunctional too, with worryingly high numbers of households falling behind on their mortgages and facing the threat of repossession.

Source: Guardian.co.uk

In an interview with the Mail on Sunday, Prime Minister David Cameron suggested cutting housing benefit for people under the age of 25 in an attempt to claw back Millions of pounds worth of Government money

Housing benefit is paid to adults on a low income, to help them pay their rent, either to the local council, a private landlord or to a hostel.

It is currently paid to around 380,000 under-25s and scrapping their entitlement would save the government around £2 Billion (GBP) a year.

The Prime Minister suggested that the current housing benefit system is sending out “strange signals” that people are “better off not working, or working less”. It encourages people not to work and have children, but we should help people to work and have children”.

The proposed reforms to the welfare system could be presented as an effort to reduce a feeling of antipathy towards people on benefits that may exist among the general public.

Mr Cameron said that current benefits system has “led to huge resentment amongst those who pay into the system, because they feel that what they are having to work hard for, others are getting without having to put in the effort.”

He also commented that cutting housing benefit for younger people would “stop the state dragging young people into dependency”.

Downing Street said that Mr Cameron wanted to encourage a debate about welfare.

The Prime Minister is also considering proposals to set benefits at a regional level, rather than a national level, in order to reflect wide regional variations in pay.

Political analysts have suggested that Mr Cameron’s comments are part of an effort to reconnect with Conservative backbenchers who believe the party’s values are being watered down under the coalition.

Housing charity Shelter has warned that cutting housing benefit for young people could lead to an increase in homelessness.

The charity’s chief executive Campbell Robb said: “To take away housing benefit from hundreds of thousands of young people – particularly in the current economic environment where young people in particular are finding it very difficult to find jobs – would have a devastating impact on many people’s lives. I think we would see many more people ending up homeless as a result of this kind of very significant change.”

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Homelessness is a real threat for young families in the UK

Homelessness is a real threat for young families in the UK

An extra 1.5 million 18 to 30-year-olds are expected to apply for private rented sector (PRS) properties over the next eight years.

The influential Joseph Rowntree Foundation says that one risk is that pressures on private rental accommodation could force young families out of the sector and into homelessness. The foundation forecasts that around 310,000 more young families will be looking for private rented housing in 2020 compared with today.

In a new report, ‘Housing options and solutions for young people in 2020’, it warns that the influx of youngsters chasing a private rental home will see young families, poorer and vulnerable people finding it hardest to compete for tenancies.

As previously reported by Legal 4 Landlords News on Friday 15th June 2012, an additional 500,000 young people will be forced to stay with their parents into their thirties, taking the total number of young people still at home to 3.7 Million by 2020.

Read the full story here http://blog.legal4landlords.com/index.php/property-renting-set-to-be-way-of-life-for-young-families/

The report is just the latest in a series of similar documents warning of the growing pressures on the private rented sector as increasing numbers of people are locked out of residential property ownership.

It warns of a three-tier race to find rented accommodation, with those at the top who can afford to pay rents, a ‘squeezed middle’ group who struggle to pay, and a bottom rung of 400,000 who risk being excluded completely.

However, there is hope for the lower tiers as leading landlord services provider Legal 4 Landlords can offer Rent Guarantee Insurance to landlords and tenants providing that the applicants pass the L4L Tenant Referencing criteria.

Kathleen Kelly, programme manager at the Foundation, said: “Our badly functioning housing system will see those on the lowest incomes really struggling to compete in the competitive rental market of 2020. Renting is likely to be the only game in town and young people are facing fierce competition to secure a home in what is an already diminished supply of housing. With 400,000 vulnerable young people, including families, on the bottom rung of a three-tier private renting system, we need to avoid turning a housing crisis into a homelessness disaster.”

The Foundation wants to see more homes built, longer tenancies at affordable rents – with the incentive of tax breaks for landlords – and the expansion of local letting agencies to find suitable homes for vulnerable young people.

David Clapham, lead author of the report, added: “With 1.5 million more young people no longer able to become home owners by 2020, it’s vital we take the opportunity to make renting work better.”

Housing charity Shelter has made the news headlines again, after launching another attack on private renting, this time attacking letting agents in Wales over their up-front fees.

Shelter launched a verbal tirade on fees charged by lettings agents in Wales and already has an active campaign under way in Scotland, where upfront fees are illegal, but the timing of the stinging attack coincides with a move by the Welsh government to introduce compulsory licensing for both agents and landlords, a move that could set a precedent in the rest of the UK.

Shelter Cymru carried out a mystery-shopping exercise with letting agents across Wales to investigate fees and charges and how they vary between agents.

Agents were asked about the costs of setting up a tenancy, deposits required, the upfront costs of renewing a tenancy, charges for credit checks, late payment charges and any other fees or charges.

Researchers found that some tenants could be charged as much as £594 in set-up fees for a property at the average market rent.

It means that as well as finding one month’s rent in advance and a deposit usually totalling a month’s rent, prospective tenants needed to find additional fees and charges of around 45% of the monthly rent. With some agents, this sum could be as high as 120%, say Shelter.

Additional charges included fees to renew contracts, check-in and check-out fees to hand over keys and check inventories, and non-refundable pre-contract administration fees for everyone who applied for a tenancy regardless of whether their application was successful.

John Puzey, director of Shelter Cymru, said: “You have to question how reasonable these charges are when credit checks can be carried out online for £20 and tenancy agreements are usually standard template contracts. These kinds of unregulated charges, which are now actually illegal in Scotland, are making the private rented sector even more unaffordable at a time when many people in Wales are already struggling to find and keep accommodation. In addition, we found that most charges were not well advertised so prospective tenants are often unable to discover the true cost of setting up a tenancy until they are well into the process of making an application, by which time they may already have handed over some non-refundable payments. Some agents charged a flat administration fee to all tenants, while others varied the fee depending on the rent level, raising the question of why the amount of administration work should depend on the tenant’s choice of home. This lack of transparency traps people into paying additional fees as it is almost impossible for them to make an informed choice when they start the process of renting a home”.

While a minority of agents published the costs of setting up a tenancy on their websites, the researchers found that with the majority this information was very difficult to obtain without asking very specific questions of the salespeople.

The Property Ombudsman’s Code of Practice for Residential Letting Agents states that agents should flag up any potential liability for fees, charges and penalties ‘prior to an applicant’s offer being formally accepted’.

But Shelter said that this is a very late stage in the process, by which time many tenants may have already committed money in the form of administration charges or holding deposits. The charity says that disclosure of fees post-application means that tenants are unable to exercise consumer choice in this area, which removes any incentive among agents for competitive price-setting.

Mr Puzey highlighted the proposals in the Welsh Government’s Housing White Paper for the compulsory accreditation of private landlords and letting agents in Wales and urged the Government to ensure that the forthcoming Code of Practice includes clear standards on transparency in agents’ fees and charges.

He said: “The private rented sector is a significant and growing element of the housing market in Wales and so we need to ensure that agents operate to the highest standards. We hope that accreditation will lead to greater transparency and a more efficient rental market for tenants, but if this does not happen then maybe a total ban on premium charges should be considered.”

The Shelter research in Wales showed that two adults renting a three-bed property pays a total of £1,448 in upfront fees on average, while two adults in a two-bed property pay £1,295 and one adult in a one-bed property pays £1,054.

Plaid Cymru’s housing spokesperson, Llyr Gruffydd AM, said: “Shelter Cymru’s research highlights some very serious concerns about the hidden charges people can face when renting a home. Plaid Cymru now wants to see some swift action on this issue from the Labour Welsh Government.

“At a time when the Westminster government is reforming housing benefit in a manner that will increase the amount of families looking for a new home, it is crucial that the Welsh government mitigates this by tackling the excessive hidden charges that tenants in the private sector face. While we welcome the Welsh government’s promise to tackle these hidden charges through new legislation on tenancy reform, we are concerned at the apparent lack of urgency. For many Welsh families, action needs to happen now. Bringing forward their proposed legislation on tenancy reform, rather than delaying, is an example of practical action they could take now to stand up for Welsh families. I urge the Labour Welsh government to stand up for Welsh families by taking swift action to tackle this problem.”

Shelter want to see an end to the bad practices of rogue landlords

RLA say bad landlords are not "Rogues" they are "Criminals!"

The UK’s largest homeless charity Shelter and the Residential Landlords Association (RLA) have clashed over the issue of bad landlords.

Both organisations have been using very strong words over the last few days, whilst calling for more action by the UK government to stamp out bad landlords.

Shelter is calling on the UK coalition Government to hold a “Rogue’ Landlord” summit, but the wording has angered the Residential Landlords Association.

In particular, the RLA are incensed by Shelter’s use of the word ‘Rogue’, saying it belittles what is really ‘criminal’ activity. The RLA have also accused Shelter of using emotional clichés in their action plan, which could rebound and spell danger for tenants.

The heated exchange began after the homeless charity posted a question on its website asking if the Housing Minister, Grant Shapps, is doing enough to evict rogue landlords?

Shelter also launched a ‘5 point’ action plan on its website, saying that the housing minister should stop talking about stamping out rogue landlords and start taking action.

Shelter says its 5 point plan is based on 86,000 complaints by tenants about landlords.

Below are the bullet points Shelter would like to see, with The RLA’s response below:

Tougher sentencing for criminal landlords: increasing the maximum penalty for ignoring a court order to improve conditions from £5,000 to £20,000.
The RLA prefers the word criminal to rogue which has Del-Boy overtones of sympathy. Penalties need to be proportionate to the crime but without better prosecution they are just window-dressing.
The RLA calls for better training and resourcing of enforcement officials in council housing department without charging the good landlords through spurious regulation.

A rogue landlord prosecution fund: earmarking money to help councils get tough on landlords blighting their area
The RLA says, throwing more money at the problem does not produce solutions. It is about priorities. The cost of successful cases can be recovered.

New protection for brave tenants: safeguard tenants from being evicted in retaliation for whistleblowing.
Shelter must not weaken landlords’ rights to evict non-paying or anti-social tenants. Speedy resolution of tenant problems is in everyone’s interests but neither Court procedures nor Council departments work in their favour. RLA says there is scope for fast track procedures such as Alternative Dispute Resolution as used in tenancy deposit schemes.

An online landlord conviction database: a new website listing all convicted landlords to help tenants avoid criminal landlords.
RLA says this is playing to the gallery with all the risks of “Trip Advisor” sites. There is need for tenants to be aware of poor quality property which can often be detected on inspection of the property before signing a tenancy agreement and to examine appropriate certificates for gas and electrical safety and energy performance.
Better landlords are members of associations and local accreditation schemes which set property and management standards. Some councils and university schemes include property inspections. Tenants have little knowledge of their responsibilities for example to reduce humidity and stop condensation.

A rogue landlord summit convened by the Housing Minister to create a clear action plan to protect tenants.
The RLA says landlords must also retain rights to defend themselves from tenants from hell – including cases of malicious damage, false allegations and anti-social behaviour.
But action to protect tenants must be proportionate to the problem. The vast majority of good landlords must be protected from the hassle-factor just to provide statistics which look as though action is being taken. More than 70 laws and regulations exist to control the PRS – they must be used better to protect tenants and good landlords from the criminal minority.

In a statement, the RLA said: “The problem is that local authorities have failed to focus on tracking down bad landlords because of seeking to meet central Government targets to license landlords. With limited resources, they put their effort into the easy-to-check landlords who are the most visible and compliant and do not concentrate instead on those who deliberately seek to evade inspection. That’s why councils brought only 270 prosecutions of landlords last year.”

Instead, the RLA said they would welcome dialogue to produce solutions but condemn spurious regulation that would hurt good landlords but not criminal ones. The idea of a rogue landlord prosecution fund would merely throw money at the problem without producing solutions. In cases where landlords are prosecuted the costs can be recovered.

While supporting safeguards for tenants against retaliatory evictions, the RLA said Shelter must not weaken the landlords’ right to evict non-paying or anti-social tenants. The speedy resolution of tenant problems is in everyone’s interests but neither Court procedures nor Council departments work in their favour. The RLA says there is scope for fast track procedures such as Alternative Dispute Resolution as used in tenancy deposit schemes.

The RLA are calling for constructive dialogue to produce solutions including:

1. A culture change in Town Halls to work with the Private Rented Sector, (PRS), as a responsible supplier of housing. The PRS provides housing for tenants evicted by social housing, yet gets little or no support when problems arise.
2. Wider use of landlord accreditation schemes to promote self-regulation allowing councils to focus on criminal landlords.
3. Fast-track dispute resolution – 135,000 re-possession cases come to the courts a year. The average time for repossession is over 4 months after the tenant has not paid rent for two months.
4. Fair-play for landlords: direct payment of Local Housing Allowance (LHA) through tenant choice. Over 7% of LHA rents (90,000 tenancies ) are not received by landlords within 8 weeks.

Over 30% of UK adults expect to spend less in 2012 compared to just 20% in October 2011, suggesting that more British people have become even more pessimistic about their finances this year.

The survey carried out by Ipsos Mori on behalf, the Resolution Foundation, who are an independent research and policy think tank organisation which aims to improve outcomes for people on limited income suggests that people have become more pessimistic about their finances since autumn last year, when the Eurozone crisis worsened.

23% of respondents to the survey said they expect their financial situation to deteriorate over the next 12 months, compared with just 15% in October 2011, when the survey was last carried out.

The latest survey also found that more people are now saving, with 30% of respondents saying they were putting money away every month, compared with 22% in October 2011.

20% of respondents to the survey also said they would not be able to go away on holiday this year.

The Resolution Foundation’s Chief Executive, Gavin Kelly said: “The longer households cut back on spending, the longer it will be before we see real economic recovery.”

The survey is part of a wider report by the Resolution Foundation, called ‘Squeezed Britain’, highlighting the pressures on low and middle-income households.

Last week, housing charity Shelter warned that more than a third of people have cut back on their food bills in the last year, in order to pay their mortgage or rent, representing an increase of 44% since 2008.

Campbell Robb, chief executive of Shelter, said: “These staggering findings show just how many millions of people are cutting back on essentials as the continued squeeze on incomes starts to really bite.”

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59% of Private Rental Sector (PRS) landlords refuse to accept applications from tenants claiming benefits, including me!

Landlords claim that tenants who do not receive any form of welfare support are far more reliable when it comes to paying the rent on time and generally looking after the property.

In a survey of more than 1,000 UK landlords by website SpareRoom.co.uk showed that over half of the landlords surveyed had a  “No DSS” clause on their adverts. I too have the same clause and whilst I do not want to discriminate against people I do feel it is necessary to protect my rental income and my properties.

Landlords taking part in the survey were asked why they would not rent out their property to housing benefit tenants:

  • 30% said non-benefit tenants were more reliable,
  • 47% said they did not want the hassle of dealing with payment problems.

SpareRoom.co.uk called for changes to the way Local Housing Allowance (LHA) was paid, joining calls from the Residential Landlords Association (RLA) and homeless charities “Shelter” and “Crisis” to return to direct payments to landlords, which could increase the number of PRS properties being let to tenants claiming state benefits.

Matt Hutchinson, director of SpareRoom.co.uk, said: “The coalition government’s planned welfare cuts to housing benefits, coupled with the lack of affordable housing in the UK, could have a devastating impact on families and individuals relying on the state for help with living costs. But it seems that landlords, who have had bad experiences with housing benefit tenants, are reluctant to help ease the pressure caused by a rental property shortfall, favouring private tenants instead. The move to change the way Local Housing Allowance was paid in 2008 was designed to give those on housing benefits greater responsibility for their finances, but what this poll shows is that the change has had overwhelmingly negative repercussions for British landlords. It’s clear from this survey that a shake-up of the current system of paying housing benefit to the tenant is desperately needed, and reverting back to the old structure, where landlords receive rental payments directly from the council would be a step in the right direction.’

According to the survey, 87% of landlords have had problems with housing benefit tenants not paying rent on time and 11% claimed to have had tenants who had stopped paying rent altogether. I unfortunately fall into both these percentages having bad experiences with benefit tenants and very little help or advice from my local authority.

In the survey, UK landlords said that problems associated with DSS tenants included late rent payments, damage to the property and problems arising from suspension of benefits.

74% of landlords said they would not take a tenant on housing benefit even with a working Homeowner acting as their guarantor and I must agree with them.

Once bitten and all that, but one thing is for sure from my point of view – NEVER AGAIN!!!

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There has been yet another survey conducted in the UK with yet another set of shocking and depressing findings…

The YouGov / Shelter survey reveals that almost 7 Million people are relying on some form of credit to help pay their housing costs, using payday loans, unauthorised overdrafts, other loans or credit cards.

The results reveal the spiral of debt that people are falling into in order to keep a roof over their head.

The survey asked 4,014 people in the UK if they had used payday loans, unauthorised overdraft, other loan or credit cards to help pay their rent or mortgage in the last 12 months.

15% (1 in 7) said yes, representing a national figure of almost 7 Million people, with almost 1 Million people using payday loans.

The homeless charity warns that 2012 could bring with it an increased risk of homelessness, for those who are struggling with their housing costs and is urging anyone worried about their debts to make seeking early debt advice their New Years resolution.

Shelter has a network of specialist advice services around the country, a free telephone helpline and online advice available at shelter.org.uk/debt, including a new budget calculator. 

Campbell Robb, Chief Executive of Shelter, said, “These shocking findings show the extent to which millions of households across the country are desperately struggling to keep their home. Turning to short-term payday loans to help pay for the cost of housing is totally unsustainable. It can quickly lead to debts snowballing out of control and can lead to eviction or repossession and ultimately homelessness. Every two minutes someone in Britain faces the nightmare of losing their home. We urge every single one of these people now relying on credit to help pay their rent or mortgage to urgently seek advice.”

Martin Lewis of MoneySavingExpert.com, said, “The UK is the crock of gold at the end of the rainbow for the world’s payday lenders. They’ve been regulated out of other countries and jump for joy at our lax supervision. That’s why these 4,000% APR lenders are exploding across British high streets. Yet these astronomical APRs aren’t the real danger and that comes from the rollover. This is where people can’t repay at the end of the month and compound interest kicks in. It’s incredibly worrying there’s now evidence of people using payday loans to meet housing costs. Many struggling with core rent or mortgage commitments will struggle to repay payday loans on time too. While it’s an obvious temptation to grasp these loans as a lifeline, in the long run it may hurt more than help. Instead I’d urge anyone struggling with payday loan and housing debts to get in touch with one of the great non-profit, non-judgmental advisors out there, such as Shelter – the sooner the better.”

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