Kids' savings 'help to pay rent'

14/03/13

By Ian Barnsley

Renters are using money from their children's savings accounts and taking out payday loans just to pay for their homes, according to a charity.

Shelter said families should not be made to turn to "drastic" measures and make "impossible choices" because of rising rents, and called for more stability in tenancy contracts.

Calls to the charity's helpline regarding rising rents or arrears have increased by nearly 33 per cent over the last 12 months, Shelter said.

Some 63 per cent of 4,300 people who live in privately rented homes in England who responded to a survey by the charity said they struggle to pay rent or have fallen behind.

One in four (26 per cent) said their rents had risen in the last 12 months, with yearly increases standing at a typical £300 as income remains stagnant.

According to Shelter, one in 12 parents who rent their homes have borrowed cash from their children in desperation so they can cover their bills.

Meanwhile, one in 33 have covered the cost of renting by taking out a payday loan, which have high interest rates.

One out of seven tenants have paid their rent by credit card, while one in 17 have been forced to move from their home due to a rise in rental costs, which is almost 515,000 people in England.

Rents have risen as many people who would have looked to buy their own home have been trapped in the rental sector as they have not been able to find the 20 per cent deposit which lenders typically demand.

However, would-be buyers have seen some rays of light in the past months, with research showing boosts in mortgage lending.

These boosts come after a Government scheme was introduced in August to try and unblock the property market. The statistics, however, are still below levels seen before the UK hit economic troubles.

Shelter's chief executive, Campbell Robb, said that tenants should be handed contracts which prohibit rent rises above inflation.

He said: "This is proof that the growing cost of renting is hitting families where it hurts, forcing them to make impossible choices about what they can cut back on next.

"When families are forced to resort to taking money from their children's savings or paying their rent on a credit card, it's a clear sign that sudden rent rises are pushing many ordinary families to the edge.

"If Government wants to make life easier for ordinary families, it has to reform our expensive, unstable rental market."

A married 27-year-old Stevenage woman with two children is among those Shelter has heard from. The woman was forced to leave her rented home in 2012 because of rental increases, the charity said.

She and her husband were employed, but the family said they were living on a bank overdraft to get by and "fighting a losing battle".

They that when their rent rose to £750 a month, it was the "final straw".

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