Renters will keep falling into debt until there’s proper action to tackle affordability of homes

Beth, from South Wales, came to us for debt advice while she was renting in the private sector and struggling with managing her budget. When she saw her income change after a life shock, she found herself unable to keep up with her rent and manage the regular payments. She said it got “progressively worse” and even “unmanageable” as she spent a “disproportionate” level of income on rent.

At last, the long-awaited reforms to improve the rights of tenants in the private rented sector are finally in force. At StepChange we’re pleased to see this, even though we know it won’t fully solve the affordability and other problems that private renters face.

The Renters’ Rights Act contains some fundamentally positive reforms, and policymakers deserve credit for following it through to implementation. The act’s key change is to abolish section 21 ‘no fault’ evictions. It will also limit rent increases to once a year and ban rental bidding wars. These are all helpful measures that should, over time, increase security and reduce the incidence that many of our clients have experienced of being forced to vacate a tenancy and then being unable to find an affordable, suitable replacement rental, which can contribute to the kind of extreme financial pressure that leads to problem debt.

Read more:

• Going into debt doesn’t mean you’ve failed. Here’s how to get help
• I’m a single working mum relying on credit to pay bills. Universal credit isn’t enough
• Renters’ Rights Act: ‘For too long, families have lived with the constant fear of eviction’

But affordability remains a key concern. In many areas, private rents are higher relative to incomes than the housing costs of other tenures. This problem is only partially addressed. Affordability is one of the key reasons why there is such an over-representation of tenants among those who seek help from StepChange for problem debt. 

It is noticeably more of an issue for private sector tenants than for StepChange clients living in any other form of housing tenure. Where one in five (19%) households in the UK are in the private rented sector, one in three (33%) StepChange clients are private renters. Most concerningly, for those clients behind on their rent, total arrears top £2,100.

Our client research shows that, among those who do get into arrears on their rent, the likelihood of an affordable repayment plan to clear the arrears is lower for private sector tenants than for those renting from social landlords. Only a third were asked about their income and expenditure by their landlord when seeking an arrears repayment plan, suggesting that affordability considerations were taken into account by only a minority of landlords. 

It’s helpful that the guidance to the new act encourages landlords to adopt an affordability approach, but this would be strengthened by the introduction of a pre-action protocol for private landlords based on the existing protocol for social tenants, which would put more emphasis on landlords and tenants to come to a mutual, sustainable repayment agreement.

Affordability will remain a very real barrier to financial health for many private sector tenants, even after the enforcement of the reforms.

There is no obvious route to see how the basic supply-and-demand issues that dictate private sector rent affordability will properly ease, at least in the short term. Until that happens, it’s likely that the over-representation of private renters among our client base will continue, but at least the new act provides a significant modernisation of renting rights and marks a big step forward in addressing the balance of responsibilities between landlords and tenants.

Do you have a story to tell or opinions to share about this? Get in touch and tell us more. 

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