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

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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
Former_MSE_HelenFormer_MSE_Helen
2.4K posts
edited 14 March 2013 at 11:42AM in House Buying, Renting & Selling
"Shelter says renters are resorting to payday loans and dipping into their children's savings to hang onto their homes..."
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Tenants forced to use payday loans to beat rent hikes

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  • HappyMJHappyMJ Forumite
    21.1K posts
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    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.
    :footie:
    :p Regular savers earn 6% interest (HSBC, First Direct, M&S) :p Loans cost 2.9% per year (Nationwide) = FREE money. :p
  • Pretty stupid title - no one is forced to use payday loans they've chosen to use payday loans.
  • Percy1983Percy1983 Forumite
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    Part of the Furniture 1,000 Posts Combo Breaker
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    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.
    Have my first business premises (+4th business) 01/11/2017 :T
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  • Why just target private landlords? It's supply and demand. Private landlords are not there to provide a "social" service. They are there to make a profit - like any other business. If there is someone who can and will pay what the landlord is asking he will continue to raise rents. I'm not saying it's right - I'm just saying it's how capitalism works! I personally have not increased my rents for 5 years - but then I don't rely on my rental income as my main source of income. I would imagine a landlord who does, would need to increase rents in order to cover his own ever-increasing cost of living.
  • edited 14 March 2013 at 1:39PM
    outofmoneyoutofmoney Forumite
    936 posts
    edited 14 March 2013 at 1:39PM
    I agree no one is forced to use Payday loans but I do disagree with HappyMJ. Sometimes life is not that simple.

    We live on income support. We get full LHA but it does not cover the rent so need to use part of the IS to top it up. We can't get a cheaper rent so don't even bother with that one. (Percy 1983 is right about the LL greed) Then we have to pay out for Gas, electric etc and that is way more than it was a few years back when 'The minimum amount you need to live on' was worked out. From what is left we need to pay for food. This has doubled over the last few years too. Plus my little children are now teenagers with bigger appetites.

    We don't have Sky, we don't have fancy games consoles, we don't have a huge TV. We don't do brand names, nor have a fancy 4X4. We really don't have much we can cut down on other than the basics.

    We do just get by, because we budget. But now we are expected to pay council tax also so I am not quite sure how we are going to manage. If our rent goes up, and utilities continue to rise we will have a major problem.
  • outofmoneyoutofmoney Forumite
    936 posts
    Why just target private landlords? It's supply and demand. Private landlords are not there to provide a "social" service. They are there to make a profit - like any other business. If there is someone who can and will pay what the landlord is asking he will continue to raise rents. I'm not saying it's right - I'm just saying it's how capitalism works! I personally have not increased my rents for 5 years - but then I don't rely on my rental income as my main source of income. I would imagine a landlord who does, would need to increase rents in order to cover his own ever-increasing cost of living.

    This is very true. But it is beginning to mean many can't afford to buy or rent anymore making more of a demand on social housing. My biggest 'dislike' though is people who buy their council house for a good price then rent it out for way over the average. That makes my blood boil a little!
  • HappyMJHappyMJ Forumite
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    outofmoney wrote: »
    I agree no one is forced to use Payday loans but I do disagree with HappyMJ. Sometimes life is not that simple.

    We live on income support. We get full LHA but it does not cover the rent so need to use part of the IS to top it up. We can't get a cheaper rent so don't even bother with that one. (Percy 1983 is right about the LL greed) Then we have to pay out for Gas, electric etc and that is way more than it was a few years back when 'The minimum amount you need to live on' was worked out. From what is left we need to pay for food. This has doubled over the last few years too. Plus my little children are now teenagers with bigger appetites.

    We don't have Sky, we don't have fancy games consoles, we don't have a huge TV. We don't do brand names, nor have a fancy 4X4. We really don't have much we can cut down on other than the basics.

    We do just get by, because we budget. But now we are expected to pay council tax also so I am not quite sure how we are going to manage. If our rent goes up, and utilities continue to rise we will have a major problem.
    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.
    :footie:
    :p Regular savers earn 6% interest (HSBC, First Direct, M&S) :p Loans cost 2.9% per year (Nationwide) = FREE money. :p
  • edited 14 March 2013 at 2:47PM
    refreshedrefreshed Forumite
    37 posts
    edited 14 March 2013 at 2:47PM
    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.
  • The situation has arisen where tenants specifically and young people in general seem to be viewed by this country as a cash machine that will never stop paying out.

    BTL landlords get all sorts of special incentives, mortgages and tax breaks to outbid first time buyers, then they get rental regulation that ensures those tenants have no rights to tenure.

    The cherry on the cake is that the government won't build any new houses or grant planning permission for people to build their own.
  • theartfullodgertheartfullodger Forumite
    11.3K posts
    Part of the Furniture 10,000 Posts Name Dropper
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    Payday loans, particularly those that charge 1000%'s APR (most do..) should be outlawed & the Backers & founders, wherever they are from, deported..... (Yes I know the law would have to be changed).
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