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There’s no denying that times are tough right now, and for many, it feels difficult to find respite. The cost of living crisis is squeezing everyone and from seemingly every angle.

According to Citizens Advice, it has been supporting more people than ever before with aid and referrals. The charity called it the “bleakest ever” start to the year and has facilitated 94,000 people with food bank referrals and access to emergency charitable grants. That’s a 178 per cent increase from the same period in 2020.

Figures show that in the first four months of 2023, it helped more people than the entirety of 2019.

Further to this, recent data from Which? revealed that hundreds of thousands of people across the UK missed payments on household bills in April.

At The Salary Calculator, we understand that it’s a challenging time and that many are looking for guidance on where to turn, so in this week’s article, we’ll walk you through the following:

• The scale of the rent and mortgage payment issue
• How people are responding to tightened finances
• How to form a plan of action and where you can find support

700,000 missed household bills in April

Which? estimates from April reveal a deeply concerning trend of financial strain across the country. The consumer choice and advice company shared that according to its estimates, in April, 700,000 people across the country missed rent and mortgage payments.

These estimates were made by combining the company’s survey data with the data from the Office for National Statistics (ONS). Specifically, it was found that renters, in particular, defaulted on rent payments, with one in 20 (5.2%) unable to pay their monthly rent to their landlord. Comparatively, 3.1% of mortgage holders missed payments.

More broadly, two million households (7.3%) missed or defaulted on at least one mortgage payment, rent payment, loan, credit card, or bill.

The situation is being informed by a number of factors, but crucially, as outlined by Which? Mortgages have jumped significantly. Last year, the average two-year fix in April 2022 was 2.86%, in April 2023, it was 5.35% – meaning remortgaging will be leaving thousands with much more expensive monthly bills. For many renters, this is being passed down from landlords, with one in five tenants in privately rented properties seeing monthly rent prices hiked by 10% or more between February last year and February 2023. This is occurring alongside food prices rising at their fastest pace ever, and sky-high energy bills.

Making more financial adjustments

To cope with the financial blows of the cost of living crisis, millions are having to rethink their finances and make adjustments and cutbacks. According to Which? around six in 10 people have had to make “at least one” financial adjustment in order to be able to afford essentials.

Which? shared that this covered everything from selling their possessions to dipping into savings. This comes to an estimated 16.6 million households across the country – a figure 35% higher than two years ago.

These figures are supported by data from Barclays, which found that increasing household bills has led to half (54%) of consumers cutting back on discretionary spending. Likewise, in order to save, people have been switching from nights out and restaurant meals to nights in, with research from KPMG finding that 63 per cent of people have been cutting back by making fewer trips to restaurants. More nights in have also led to an increase in spending on subscription services such as Netflix and NowTV.

Forming a plan of action for rent and mortgage payments

With mounting bills and pressure from lenders and landlords, it’s understandable that you might be feeling stressed – and while people deal with stress in different ways, the temptation to try and avoid the issue is often strong. Many also shoulder a lot of the stress alone. In fact, according to research by Lowell Financial, a whopping 69% of people who are in debt don’t talk about it with anyone.

But however tempting that might be, when it comes to rent and mortgage payments, it’s important to deal with the situation head-on.

With rent, while it’s always a top priority to put enough money aside to pay your landlord or letting agent, it’s not always possible. After all, right now, rent prices are increasing at their fastest rate in 13 years. But, you must act straight away.

It’s also important to remember that a landlord can start the eviction process straight away, and if you’ve previously missed or been late on payments, you’re already in arrears or you’ve come to the end of your fixed term period.

Citizens Advice also recommends that you reach out immediately if you’ve not paid rent for eight weeks or more, your landlord has initiated court procedures to have you evicted, you’ve received court papers, or you’re expecting bailiffs.

An important point of action is to assess your finances and see how much you can realistically pay, even if it’s not the full amount. Then, initiate a conversation with your landlord and propose these terms. It’s key to see what you’re entitled to and see if you can apply for Discretionary housing payments (DHPs) or certain benefits. You should also be aware that landlords can ask to make deductions from your benefits.

Below are some key contacts to reach out to when dealing with rent arrears:

• MoneyHelper
• Shelter
• Citizens Advice

If you’re having difficulty paying your mortgage or are in arrears, while lenders typically wait around 15 days after a missed payment to reach out, you should reach out straight away. However, prior to doing that, as with rent arrears, it’s important to calculate a budget of what you can afford to pay, which you can share when you contact them. If this feels difficult, speak to an adviser at your nearest Citizens Advice.

It’s also important to be honest, and assess whether or not the situation is likely to be temporary or long-term. If the former, they may suggest making a temporary payment arrangement or an interest-only mortgage – find out more about that here.

If the situation is not looking like it will be temporary, there are other routes you can take. For example, you may be eligible for certain benefits or Support for Mortgage Interest (SMI) and be sure to look into mortgage rescue schemes, for example, the Breathing Space scheme.