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MSE News: Tenants forced to use payday loans to beat rent hikes

edited 14 March 2013 at 11:42AM in House Buying, Renting & Selling
34 replies 3.7K views
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  • Helen2k8Helen2k8 Forumite
    361 posts
    HappyMJ wrote: »
    The LHA rate is set so that 30% of properties are affordable in your BRMA (broad rental market area). You choose to live in a nicer part of town where properties are more expensive and therefore this costs money. If as you say there is nothing cheaper then why is your LHA rate so low? Do your kids share a bedroom or do they have a bedroom each? Housing Benefit will provide enough money for 2 children of the same sex 15 and under to share a bedroom...not one bedroom each. According to housing benefit having a bedroom each is a luxury.

    You should also be getting child tax credits and child benefit to cover a significant part of the costs of raising children.

    Did you consider that maybe that cheap 30% are FULL?
  • Takeaway_AddictTakeaway_Addict Forumite
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    Percy1983 wrote: »
    Well people may be going the wrong way about clearing payments, but don't let that cover the actual point.

    Landlords greed is crippling families, in many cases mortgage costs have reduced yet they still increase rents, they blame many things but never admit its just down to greed.

    The private rental sector needs regulating right now.

    As has been pointed out they are a busness, there to make as much money as possible and with this they run the risk of non payment, damage etc.

    If maybe the landlords had protection against this then there would be cause to drop the rents but they don't so they have to insulate themselves.
    Don't trust a forum for advice. Get proper paid advice. Any advice given should always be checked
  • edited 14 March 2013 at 2:21PM
    Percy1983Percy1983 Forumite
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    edited 14 March 2013 at 2:21PM
    As has been pointed out they are a busness, there to make as much money as possible and with this they run the risk of non payment, damage etc.

    If maybe the landlords had protection against this then there would be cause to drop the rents but they don't so they have to insulate themselves.

    I do believe there is insurance they can take out for such things.

    The problem is running a business in an immoral way is fine with items don't need (ie the margin on an iPhone), but when it involves something as basic as shelter which everybody needs they shouldn't be allowed to just keep milking it.
    Have my first business premises (+4th business) 01/11/2017 :T
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  • FrogletinaFrogletina Forumite
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    Budgeting rules

    1. Pay rent
    2. Pay council tax
    3. Prioritise what is left according to your needs not wants.

    Don't borrow money - if you cannot afford what you want now, you won't be able to afford it next week/month as well as pay back what you have borrowed with interest.
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  • TopQuarkTopQuark Forumite
    451 posts
    Percy1983 wrote: »

    The problem is running a business in an immoral way..... but when it involves something as basic as shelter which everybody needs they shouldn't be allowed to just keep milking it.

    This hits the nail on the head. No-one is saying that private landlords are charities but there needs to be limits.

    I personally couldn't sleep at night if I knew that my rent increases meant that my tenants struggled to feed their kids each month (assuming that they had already cut right back to the basics). What kind of life is that for anyone?
    Remember Occam's Razor - the simplest explanation is usually the right one. :)

    32 and mortgage-free :D
  • TiddlywinksTiddlywinks Forumite
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    refreshed wrote: »
    The problem is most tenants do not know how to budget, thus the reason they are renting there is a number of them that intend not to pay there rent, they can fall into arrears and drag out the eviction process, then move onto another property. These loan companies do take advantage and attempt to target a percentage of the vulnerable but some of these individuals take the loan and have no intention to pay it back, then act like the victims, there has been enough media attention on these companies so most know not to enter into a contract with them. Places like the CAB encourage tenants not to pay the rent and highlight the fact that they can get client debt written off,(worked at cab) so some people are taking credit they they know that they cannot pay back. A vicious cycle is being created by CABS, getting debt written off then these individuals keep on falling into the same trap, and coming back to use the services, financial education is needed, prevention of debt is better. I have to feel sorry for private Landlords because at the CAB we encourage clients to not make themselves intentionally homeless so they can be rehoused by the council. The eviction process may be long and a landlord will suffer a lot during this period, not only financial loss but emotional stress. If a tenant had arrears we would tell them to try and pay rent but then tell them loopholes on how to get their case to drag on until the council could rehouse them. Some people that could not pay their rent were genuine and I felt sorry for them but most of the time they these genuine cases had discussed it with their landlord, and if they had a good record the landlord would reduce rent or come up with a repayment plan.


    Firstly, I'd encourage you to use paragraphs - they are free and so very money saving!

    I shudder at the thought that someone with your opinions was actually allowed contact with members of the public in any 'official' capacity with the CAB. You have a very narrow view of your clients and the CAB - have you an understanding that you saw only the troubled tenants at the CAB? All the happy ones would have no need to visit about their tenancy.

    I rented for a number of years as a choice - to keep my work options open during re-organisation and to give myself space to clear my head after a relationship breakdown - your statement that most tenants don't know how to budget is, frankly, insulting.

    Back to the survey, I would be interested in the demographics for the respondents and the selection process... as that can severely skew any results.

    For instance, if you want to do a healthy eating survey and wanted to prove a less healthy diet then you'd ask people on their way out of burger bars and chippies rather than health food shops.

    This report was produced by a charity with an interest in regulation of private tenancies etc... ... just a thought.
    :hello:
  • sandsnisandsni Forumite
    683 posts
    Payday loan companies are just loan sharks for the digital age. I can't believe they haven't been outlawed by now. But I suppose if they didn't exist then the old-fashioned loan sharks calling at people's doors would just fill the void.
    But no one forces anyone to use these companies and I agree with previous posters that a lot has to do with people's expectations. I am currently on health related benefits, but I've chosen to live within those limits. I buy about 2 pairs of jeans per year and wear them till they fall apart, same with shoes. I couldn't tell you the last time I bought music, books, films. I saved the reward points from a TV survey I'm involved with for 2 years to upgrade my tv to a digital one, and made do with the old one until I could upgrade without debt. But I've realised just how little I actually need most of these things! I have a set amount each week to spend on food/toiletries and buy the essentials first (i.e milk, toothpaste etc.) - if there's nothing left over for "treats" then they don't get bought. A lot of what people consider "essentials" really aren't. So what if you have to wait a couple of years for a film to come to terrestrial tv and miss it at the cinema? So what if you don't have a new outfit every week or every month? A lot of my clothes come from charity shops (I grew up in hand-me-downs so what's the difference?). If you have to wait a month to be able to afford some crisps, boy do they taste good :-)!
    I would be surprised if many people actually, genuinely, take out a payday loan because they can't afford to pay their rent. I think it's more likely they've taken it out to make up the shortfall because they've made something else a priority in the days/weeks before rent due day. But they're not going to admit that to Shelter or CAB. It's easier to say "I couldn't afford the rent" and make it someone else's problem.
    I feel for anyone trying to bring up kids on benefits, but maybe it's time the word "no" made a comeback. When your kids are older, they won't even remember the things you bought them or didn't buy. They'll remember the time you spent with them and what you did together.
  • podpersonpodperson Forumite
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    HappyMJ wrote: »
    Payday loans....1 in 33 households need to learn to budget.

    Get paid...pay the rent then live off the rest. If it isn't enough then cut the luxuries (sky, mobiles, holidays etc) and if that still isn't enough then move somewhere cheaper. If that still isn't enough then stop paying the full payment on unsecured debts. If that still isn't enough then reduce spending on other things and live within the income the household gets.

    Never ever borrow on a payday loan except in case of emergency...paying the rent is not an emergency. It should have been budgeted for. If the household income isn't high enough they may be entitled to some benefits such as housing benefit.

    I agree that Payday loans are horrendous but it's not always quite that cut and dried. I haven't had a payrise in over three years as apparently the business I work for can't afford it. Yet my rent has gone up again for the second time in six months, my electric has increased again, my council tax is going up, food is more expensive - and yet I have to pay it all from the same amount of money. I'm struggling as it is and don't how I'm going to manage with the new increases.

    I don't have anything like Sky, I haven't been on holiday in over 5 years, I don't drive so have no car expenses, I don't have any debts I'm paying off, I don't have a mobile contract, I rarely go out, I wear my clothes until they're dropping to bits and since my tv blew up two months ago I'm using a 12" old computer monitor.

    I don't know what else I can cut down apart from moving house completely and then the moving costs, new deposit and month upfront are money I don't have to hand - and the only cheaper properties are out of town which would drastically increase my travel costs to work anyway.
  • Firstly, I'd encourage you to use paragraphs - they are free and so very money saving!

    I shudder at the thought that someone with your opinions was actually allowed contact with members of the public in any 'official' capacity with the CAB. You have a very narrow view of your clients and the CAB - have you an understanding that you saw only the troubled tenants at the CAB? All the happy ones would have no need to visit about their tenancy.

    I rented for a number of years as a choice - to keep my work options open during re-organisation and to give myself space to clear my head after a relationship breakdown - your statement that most tenants don't know how to budget is, frankly, insulting.

    Back to the survey, I would be interested in the demographics for the respondents and the selection process... as that can severely skew any results.

    For instance, if you want to do a healthy eating survey and wanted to prove a less healthy diet then you'd ask people on their way out of burger bars and chippies rather than health food shops.

    This report was produced by a charity with an interest in regulation of private tenancies etc... ... just a thought.

    At no point did I state that all clients that I saw attempted not to pay the rent I stated some individuals. During my time as an advisor we were all encouraged to work in the tenants favour even when we were aware that the tenant had not paid rent and had misused housing benefit payments that were supposed to be used for rent. We were told not to offer impartial advice but advice that would keep tenants in a private house along as possible, at some points I did think this was wrong because private Landlords also have costs such as mortgage costs. One Landlord I recall lost his property due to rent arrears and damage caused by one of the clients.


    My years working there I saw a pattern emerge, certain clients would only tell half a story, would not inform us that they had missed rent payments and had not paid top- ups or had been to the CAB with rent arrears previously. We were actively encouraged to help clients fabricate stories on disrepair to offset rent costs and tell clients to claim that they had been harassed by their Landlords. When repeat clients are coming in every year asking for new carpets, bedding and washing machines from general charities and the social fund it makes me believe that some people are taking advantage of these advice agencies and although they a godsend for some there are others that overuse the service and become reliant on it.

    There are good landlords and bad landlords but as a paying tenant you have the right to move on, the problem occurs when a tenant does not pay and then expects advice agencies to get them at of a hole. Most Landlords would rather keep a good tenant that attempts to pay rent and instead of lose the good tenant they will take a rent decrease, due to other costs such as re -letting having an empty property. It is easy to make Landlord look like the bad guy but as an advisor you are only hearing one part of the story. The council have a department to attempt to stop evictions so that they do not have to re house tenants due to a shortage of housing, direct payments to landlords should be introduced to stop arrears building up or the council should house tenants that are known for reoccurring rent arrears.

    I will never understand why some clients would take on a house that they clearly could not pay for, especially when LHA did not cover it and top-ups were so much, Some cases of rent arrears were genuine with people not being able to cover cost due to illness or a change of circumstances such as becoming redundant, I found it rewarding helping clients that had arrears due to circumstances beyond their control. If you are a genuine case there is help available such as discretionary payments.

    Schools need to educate youngsters on managing finances so that in years to come people are able to deal with their own finances and issues instead of using the citizens advice as a first point of call. Perhaps the government should provide loans in these emergency cases after all it is for rent? And shelter is one of the most important things is it not? Some of the clients that I saw could not afford rent but had the latest I phones and other gadgets with them when they attended appointments.
  • lisslisslissliss Forumite
    58 posts
    Tenth Anniversary
    Percy1983 wrote: »
    I do believe there is insurance they can take out for such things.

    The problem is running a business in an immoral way is fine with items don't need (ie the margin on an iPhone), but when it involves something as basic as shelter which everybody needs they shouldn't be allowed to just keep milking it.

    You're absolutely spot on. Affordable housing is a human right. Bring back rent controls!
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