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Missing rent and mortgage payments: What’s happening, and where can you find help?

by Madaline Dunn

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.

 

Tags: bills, cost of living crisis, Economy, Mortgages, rent

The rising rent issue

by Madaline Dunn

Rent prices in the UK ​​are rising at the fastest rate in five years, further hiking up the cost of living as millions of people feel the squeeze. As the ‘cost of living crisis’ continues, politicians have commented that it’s a “very difficult time” but are failing to take meaningful action.

As more and more low-income tenants are forced to make ‘heat, eat or pay rent’ choices, many argue there has never been a better time to reintroduce rent controls to help address the crisis.

The latest news is undeniably distressing, but at The Salary Calculator, we’ll make sure you’re up-to-date with the latest on personal finance. In this article, we’ll walk you through:

• Why rent prices are rising
• What the experts are saying about the situation
• Whether calls for rent controls are being taken seriously

What’s going on with rent prices?

In the UK, rent prices are on the rise, with statistics from ONS showing that this rise is at the fastest rate in five years. Research shows that the average annual UK rental growth has also reached a 13 year high, with rents increasing by 8.3 % by the end of last year. Unfortunately, there is further bad news, with Rightmove predicting that rent will increase by another 5% in the year ahead. Reports have revealed Wales and the northwest of England saw the largest increase in asking rents. There, rent prices increased by 12%, while in the southwest of England, rent rose by 11%.

Of course, this pinch is pushing many to the brink. Back in 2021, Citizens Advice revealed that half a million private renters in the UK were behind on their rent, with an estimated £360 million owed UK-wide, and within the last year, the situation has not improved. Together, housing charity Crisis and Heriot-Watt University have forecast that over 66,000 more people will be homeless by 2024. Likewise, a survey of 155 English councils found nine in ten town halls expect to see a surge of evictions from private rented homes in 2022.

So, exactly why are rent prices so high? Well, right now, there’s a high demand for renting and a low number of rental properties available, which is in part due to Covid-19’s disruption to the housing market. Propertymark, the membership body for property agents in the UK, has even warned that the situation is likely to worsen, with more landlords planning to exit the market due to “increasing regulation and taxation.”

Sarah Coles, a senior personal finance analyst at Hargreaves Lansdown, calls this predicament a “dual problem” for renters, whereby rents rise while there are fewer properties on the market to choose from. Speaking to i News, she said: “No wonder we’re hearing so many stories of renters getting dragged into bidding wars, where they’re forced to pay more than the advertised rent in order to have somewhere to live.”

What are the experts advising?

When faced with rent hikes, often it feels like landlords hold all the cards, and there is nothing you can do as a renter to fight back, however as a renter, there are a few things you can do.

Renters are well within their rights to question why their landlord is increasing their rent. Likewise, it’s important to remember that landlords can’t just increase their rent prices by how much they want or whenever they want.

Once you’ve found out why your landlord is hiking your rent, you can also try to negotiate on the price. When negotiating, Citizens Advice recommends that tenants look at similar properties in the area and use those rent prices as “evidence” to show why the hike shouldn’t go ahead or that it should go ahead at a lower rate. The organisation suggests that often landlords will prefer to negotiate rather than lose their tenants.

That said, negotiation isn’t always possible, and in situations where tenants feel like they’re running out of options, they can appeal to a tribunal for rent complaints.

Unfortunately, if you’ve exhausted all your options, you may have to look into downsizing, becoming a lodger, sharing a house with other tenants, or moving into a cheaper area. Speaking about the terrible ultimatum renters are being faced with, Coles said: “Those hoping to stay in their home for another year are facing huge rental hikes. If they can’t afford it, they face the horrible expense and upheaval of a move – as well as the prospect of trading down to something smaller or in a less expensive area.”

Calls for rental controls

It is undeniable that the housing market is out of control in the UK, and to combat this; some are calling for rental controls to be reintroduced back into the UK. Rental controls are regulations that ensure the affordability of housing, and place a cap on the amount a landlord can charge tenants when leasing a new property or renewing a lease. These controls were essentially removed back in the 1980s during the Thatcher era, with the Housing Act 1988.

Now, Sadiq Khan, Mayor of London, is leading the call for change in London, and in the past has said that introducing rent controls in London could act as a “blueprint” for other cities with out of control rent prices.

Elsewhere, in Bristol, local housing chief, Tom Renhard, is lobbying Ministers to access rent control powers and wants to involve other core cities with this plan. The cabinet member for housing and communities argues that while there are “some good landlords”, there are also “a lot of terrible ones.” Adding: “Some [landlords] aren’t doing the repairs even now when rents are going up. If you can’t afford to upkeep a home, then why are you renting it out? People deserve to live in a home that’s fit for human habitation.” Bristol City Council is subsequently held a “Renting Summit” on 2 March 2022 to explore this.

Tags: housing market, Personal finance, rent

The cost of rent across the UK

by Madaline Dunn

Rent in the UK is on the rise. According to recent figures from HomeLet, the average cost of rent in August reached a record high of £1,053. That’s up 6.9% from last year and 2.3% from the previous month.

Wales saw the highest annual price rise, up 12.8% from last year; meanwhile, the North East saw an annual increase of 5.8%.

So, just how expensive is it to rent in the UK, and what’s causing rent prices to rise?

At The Salary Calculator, we’ll walk you through:

• Why rent prices in the UK are rising
• The lowest rent prices in the UK
• The highest rent prices in the UK

Why are rent prices on the rise?

UK rent prices are on the rise for a number of reasons, including a consistent rise in demand for rental properties. Research from BuyAssociation, in June revealed that a total of 88 prospective private renters were registered per estate agency branch in the UK.

The locations that have seen the biggest increase in demand include the West Midlands and Birmingham, and Yorkshire & the Humber.

The loosening of Covid-19 restrictions, improved job security, and young people moving back out of their parents’ homes have also been pinned as reasons for rent rises.

Commenting on what he thinks is the cause behind the hike, Andy Halstead, HomeLet & Let Alliance Chief Executive Officer, said: “Throughout the Coronavirus pandemic, the Government rightly took measures to protect tenants but didn’t go far enough to balance the protection for landlords.”

He added: “It’s a continuation of the theme that we’ve seen for many years, with landlords being penalised by higher taxes and increased complexity in obtaining possession of their properties. Increased costs for landlords mean increased costs for tenants.”

Where are the cheapest places to rent in the UK?

When looking to rent a property in the UK, a whole host of factors go into decision making, but according to Statista, the most important one for 70% of UK residents is cost.

Saving on rent means that you have more cash in your pocket for the things you love. So what are some of the cheapest rental rates you can secure? By region, these include:

• North East – Average rent: £547 per month
• Yorkshire & Humberside – Average rent: £701 per month
• Wales – Average rent: £702 per month
• East Midlands- Average rent: £704 per month
• Scotland – Average rent: £738

Specifically, the following cities offer the lowest rent prices across the UK:

• Bradford – Average rent: £470.50 per month
• Sunderland – Average rent: £486.50 per month
• Kingston upon Hull – Average rent: £491.56 per month
• Middlesbrough – Average rent: £507.71 per month
• Blackpool -Average rent: £510.25 per month

Of course, London has some of the highest rent prices in the world. That said, there are some locations in London where you can secure slightly lower rent rates. This includes:

• Croydon – Average rent: £1,200
• Barking & Dagenham – Average rent: £1,210 per month
• Bromley – Average rent: £1,250 per month
• Redbridge – Average rent: £1,275 per month
• Hillingdon – Average rent: £1,300 per month

For those looking to keep costs low, according to a report by SpareRoom, Bradford, Middlesbrough, and Sunderland offer some of the lowest rates to rent-a-room:

• Middlesbrough – Average rent: £349 per month
• Sunderland – Average rent: £350 per month
• Bradford – Average rent: £364 per month
• Huddersfield – Average rent: £365 per month
• Liverpool – Average rent: £395 per month

Where are the most expensive places to rent in the UK?

Some of the prices of the most expensive places to rent in the UK will make your eyes water.

The most expensive regions to rent in the UK include:

• Greater London – Average rent: £1607 per month
• South East – Average rent: £1105 per month
• East of England – Average rent: £1005 per month
• South West – Average rent: £948 per month
• North West – Average rent: £799 per month

Aside from London, which is the most expensive city to rent in the UK, some of the most expensive rental rates, according to Thomas Sanderson, can be found in the following cities:

• Brighton & Hove – Average rent: £1,461.00 per month
• Oxford – Average rent: £1,442.80 per month
• Poole – Average rent: £1,251.25 per month
• Bournemouth – Average rent: £1,125.89 per month
• Cambridge – Average rent: £1,112.25 per month

Although renting a room in a house can be a way to avoid paying most of your wage packet to your landlord, there are some locations where renting a room is still pretty steep. For those weighing up their rent-a-room options, some of the most expensive places include:

• Jersey – Average rent: £784 per month
• Twickenham – Average rent: £684 per month
• Barnet – Average rent: £666 per month
• Guernsey – Average rent: £656 per month
• Kingston upon Thames – Average rent: £644 per month

Tags: coronavirus, Economy, houses, rent