Private renters twice as likely to be in problem debt as general population

23 May 2023

New polling and report from StepChange Debt Charity reveals a private rental market unable to meet the needs of financially vulnerable tenants, with one in six private renters (1.2m people) relying on credit to make ends meet. The charity welcomed last week’s Renters (Reform) Bill, but says it does not go far enough to address the issue of private renters experiencing financial difficulty.

StepChange today launches a new report, Trapped in Rent, which examines a private rented sector (PRS) that is unaffordable, inaccessible and insecure for those on the lowest incomes, leaving them at high risk of problem debt, poor mental and physical health and prolonged housing insecurity. Alongside the report, StepChange commissioned polling through YouGov that found:

• 15% of private renters (1.1m people) are in problem debt, compared to 8% of the general population
• The number of private renters in problem debt (see notes to editors) has risen sharply from 800,000 people (11% of private renters) in January to 1.1m people (15%) in May
• Half of all private renters (3.7m people) have seen their rent increase in the last 12 months
• More than 1.2m private renters (17%) are using credit to make ends meet
• Two thirds (66%) of renters whose rent increased said this has had a negative impact on their mental health

The Government’s long-awaited Renters (Reform) Bill will ban ‘no-fault’ evictions, but the report highlights an overlooked group of financially and otherwise vulnerable PRS tenants who face a number of challenges that will not be addressed by these proposals. The strengthening of grounds for eviction on the basis of arrears leaves many falling behind on their rent vulnerable to hair-trigger eviction. With so many renters in financial difficulty, StepChange is calling on the Government to introduce stronger protections for those who fall behind on their rent (see recommendations below).

StepChange’s report draws on a survey and interviews with clients from a range of housing tenures, and repeatedly reveals those renting privately to be the most likely to suffer the poorest outcomes.

Against a historic backdrop of rapidly increasing rents, stagnating incomes and housing benefit frozen since 2019, StepChange’s client survey found private renters struggled with the affordability of their homes more than any other housing tenure. Average monthly private rent payments were found to be almost double those in the social sector, and 39% more than average mortgage payments, while 78% of PRS tenants who receive housing support said that support did not cover all of their rent costs.

The report also highlights that while private renters face the same financial setbacks as people who live in council and housing association homes, they are not afforded the same protections. Respondents to the survey found PRS landlords often claw back rent arrears at an unaffordable rate and are less likely than social landlords to signpost tenants to support. Almost half (46%) of PRS tenants in arrears surveyed said that repayments were unaffordable, compared to 32% of social tenants. They also repaid an average of four times more each month in arrears repayments compared to both council and housing association tenants.

Unaffordable rent was just one of the barriers to finding and keeping a home identified by survey respondents, with debt, being in receipt of benefits and high fees all making it harder for clients to access housing. Over two-fifths (41%) of respondents reported that being in receipt of benefits was a barrier to renting privately, while over half (52%) of clients said that access to housing had been negatively affected by factors linked to financial difficulty.

Meanwhile, one in five private renters who tried to find a new home in the last 12 months stated that they were asked to pay more than two months’ rent in advance and more than half (52%) were asked to bid on the property they were trying to rent; just 28% were successful. This is particularly concerning in the context of a PRS that is housing a significant proportion of people with low incomes or who are otherwise vulnerable.

The knock-on effects of the many stresses of renting privately inevitably manifested themselves in poor health and wellbeing, with three in four (75%) private renters saying that they or their family had been negatively affected by housing issues. This included direct impacts on health, for example on chronic health conditions, as well as the impact of housing insecurity and affordability worries on mental health problems.

As part of the Government’s reform of the private rental market, StepChange is calling for ministers to go further in order to ensure financially and otherwise vulnerable PRS tenants get the support they need:

• In light of the exceptional pressures on tenants, the government should increase funding to help struggling PRS renters who face acute affordability pressures, fall into arrears or cannot meet one-off costs such as house moves. Extra discretionary funding should be matched by a strategy to increase access to support among PRS tenants experiencing financial difficulty and in vulnerable circumstances.
• The government should restore housing benefit to cover the real cost of rent and remove or uprate caps that further reduce affordability in areas with the highest costs
• The government should prevent unnecessary ‘hair-trigger’ evictions due to arrears by bringing in protocols that ensure affordable repayment plans are put in place where tenancies are sustainable

StepChange Director of External Affairs, Richard Lane, said:

“Everyone deserves to live in a house they can call home, but this is becoming increasingly out of reach for a growing number of private renters. Against the backdrop of a frenzied rental market, where bidding wars, sky-high deposits and rising rents are commonplace, those who are financially vulnerable are often left with no choice but to take on unaffordable, insecure, poor-quality accommodation just to keep a roof over their heads.

“The Government’s Renters’ Reform Bill will rightly withdraw landlords’ rights to carry out no-fault evictions, but there is more to do to protect those who should be in socially rented accommodation but have no hope of accessing it. Unless we see benefits that cover the real cost of renting, alongside strengthened rules that protect financially vulnerable tenants who fall behind on their rent, the cycle of debt and housing insecurity will be doomed to repeat itself for millions of people.”

Notes to Editors

1. StepChange’s report ‘Trapped in Rent’ is available here.
2. Polling figures for May 2023 are from YouGov Plc.  Total sample size was 2,120 adults. Fieldwork was undertaken between 4th - 5th May 2023.  The survey was carried out online. The figures have been weighted and are representative of all UK adults (aged 18+).
3. Polling figures for January 2023 are from YouGov Plc.  Total sample size was 1,784 adults. Fieldwork was undertaken between 10th - 11th January 2023.  The survey was carried out online. The figures have been weighted and are representative of all UK adults (aged 18+).
4. Total population aged 18+ in the UK: 52,890,044 (reference: ONS, Population Estimates for the UK: mid-2020). Number of private renters estimated using the proportion of respondents in YouGov May 2023 survey who said they were renting privately.
5. Signs of financial difficulty include making just the minimum repayments on debts; using overdraft in each of the last three months, using credit, loans or an overdraft to make it through to payday; falling behind on essential household bills (e.g. rent, mortgage, energy bills, council tax etc.); using credit to keep up with existing credit commitments; getting hit by late payment or default charges; missing a regular monthly payment on at least one debt; and using credit to pay essential household bills (e.g. rent, mortgage, energy bills, council tax etc). Severe problem debt means selecting three or more of these options.