1.3 million private tenants struggling

27 November 2009

A stressed families

Private tenants are the hidden victims of the recession, new research from Shelter and Money Advice Trust (MAT) shows.

Taking the Strain: The Private Rented Sector and the Recession, reveals that a massive 1.3 million low-income households are struggling or falling behind with their finances and many feel under mental and emotional strain.

The research also shows many landlords are finding it hard to cope, with more than 40% either struggling sometimes or in constant financial difficulty. Some are even questioning their future in the sector which could leave many tenants vulnerable if landlords need to sell their properties suddenly.

Shelter and MAT commissioned YouGov to survey 745 renters on household incomes below £20,000 (£25,000 in London) and 440 landlords from the National Landlord’s Association to get a unique insight into the impact of the recession across the private rented sector.

The results show the daily battle tenants and some landlords are facing, yet many are failing to access advice and support. Among tenants:

  • 90 per cent of respondents, equivalent to 1.3 million households across England and Wales, are struggling with their household finances - an increase of 56% since a similar sample taken in 2006
  • Four in ten (39%), equivalent to around 600,000 households, feel their debts are harming their physical and mental well-being, rising to almost 50% in households with children
  • 60% of  tenants in receipt of housing benefit or local housing allowance receive less in payments than the cost of their rent, with almost a quarter making up a difference of more than £49 per week
  • Almost half of tenants (46%) falling behind with their finances had not received advice about their debts in the past year, with a quarter saying they were too embarrassed to ask.

Although most landlords said they were managing to ride out the recession, a significant minority are struggling or falling behind - with potential consequences for tenants:

  • 41 per cent are struggling sometimes or are in constant financial difficulty
  • Close to half (47%) have tenants in arrears, rising to 57% among landlords struggling or falling behind with their finances, and highest among those letting to housing benefit or LHA tenants (65%)
  • Almost a quarter (23%) expect to have to evict tenants because of rent arrears, while 30% are now asking for bigger deposits
  • Almost one in ten (9%) of struggling landlords could not see themselves being landlords in 2010

With a range of Government schemes introduced over the past two years to help struggling homeowners, Shelter and MAT are calling on the government to address the issue of affordability in the private rented sector and invest in targeted advice and support for tenants.

The charities are also urging the government to take forward proposals for a national register of landlords which would help professionalise the sector.

Kay Boycott, director of policy and campaigns at Shelter, said: 'This research paints a depressing picture of the daily battle faced by tenants at the lower end of the private rented sector, with many barely able to keep their heads above water.

'While we welcome the help that’s available for homeowners in arrears, private tenants who are struggling to keep their homes should not be forgotten.

'The government must recognise the significant role the private rented sector is playing in bearing the brunt of this recession by increasing funding for advice and support services, and setting out a long-term vision for the sector.'

Ms Boycott added: 'Shelter and Money Advice Trust will be taking forward the results of this research by working together to better promote services targeted to those in the private rented sector. We urge anyone who is struggling to contact our free advice services as soon as possible to get professional advice and support.'

Joanna Elson, chief executive of Money Advice Trust, said:

'It is clearly a matter of concern that so many tenants and landlords are facing financial difficulties and don’t know where to turn. MAT and Shelter will be working to raise awareness of the availability of high quality independent free advice which we know can be a lifeline for those in debt.'