A debt counselling charity is warning of a huge increase in rent arrears which will keep people off the housing ladder for the foreseeable future.
The Money Advice Trust says the number of calls to its national debtline service from people with rent arrears has ‘exploded’ over the last five years.
From January to August 2007, the free advice helpline received just over 6,000 calls from people with rent arrears. This has now doubled to 12,000 over the same period this year.
Calls from people with rent arrears have increased 28% over the last two years and 9% in the last 12 months. Nearly 10% of all people calling National Debtline have rent arrears, compared to 6% in 2007 and 8% last year.
Additionally, figures suggest tenants have broader debt problems, with renters for the first time accounting for more than half of the total calls.
Joanna Elson, chief executive of the Money Advice Trust, said: “In the current environment it is clearly difficult for people to save the money for a deposit to buy a house, and this has led to more people remaining in the renting market for longer. Where there is limited supply and greater demand, rising prices will always follow.
“However, rising rent prices are not only making it harder for people to save for a deposit, they’re also pushing more people in debt.
“This is a dangerous spiral; with increasing numbers of people entering the renting market, and fewer people leaving it, it is hard to see how the situation will improve.
“Many people’s budgets are tight already with stagnant earnings growth and inflation above the Bank of England’s 2% target. Sharp jumps in renting costs can push individuals and households over the edge and into an unmanageable situation.”
Property group LSL is reporting that rents are continuing to rise on a monthly basis, and are at a record high.