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  • FIRST POST
    • Former MSE Helen
    • By Former MSE Helen 14th Mar 13, 9:18 AM
    • 2,324Posts
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    Former MSE Helen
    MSE News: Tenants forced to use payday loans to beat rent hikes
    • #1
    • 14th Mar 13, 9:18 AM
    MSE News: Tenants forced to use payday loans to beat rent hikes 14th Mar 13 at 9:18 AM
    "Shelter says renters are resorting to payday loans and dipping into their children's savings to hang onto their homes..."

    Read the full story:

    Tenants forced to use payday loans to beat rent hikes



    Click reply below to discuss. If you havenít already, join the forum to reply. If you arenít sure how it all works, read our New to Forum? Intro Guide.

    Last edited by Former MSE Helen; 14-03-2013 at 9:42 AM.
Page 1
    • HappyMJ
    • By HappyMJ 14th Mar 13, 9:28 AM
    • 20,595 Posts
    • 17,201 Thanks
    HappyMJ
    • #2
    • 14th Mar 13, 9:28 AM
    • #2
    • 14th Mar 13, 9:28 AM
    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.

    Regular savers earn 6% interest (HSBC, First Direct, M&S) Loans cost 2.9% per year (Nationwide) = FREE money.
  • tomvandam
    • #3
    • 14th Mar 13, 9:48 AM
    • #3
    • 14th Mar 13, 9:48 AM
    Pretty stupid title - no one is forced to use payday loans they've chosen to use payday loans.
    • Percy1983
    • By Percy1983 14th Mar 13, 11:18 AM
    • 4,990 Posts
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    Percy1983
    • #4
    • 14th Mar 13, 11:18 AM
    • #4
    • 14th Mar 13, 11:18 AM
    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
    Quit day job to run 3 businesses 08/02/2017
    Started third business 25/06/2016
    Son born 13/09/2015
    Started a second business 03/08/2013
    Officially the owner of my own business since 13/01/2012
  • Tottyshouse
    • #5
    • 14th Mar 13, 11:33 AM
    • #5
    • 14th Mar 13, 11:33 AM
    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.
    • outofmoney
    • By outofmoney 14th Mar 13, 11:36 AM
    • 906 Posts
    • 2,554 Thanks
    outofmoney
    • #6
    • 14th Mar 13, 11:36 AM
    • #6
    • 14th Mar 13, 11:36 AM
    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.
    Last edited by outofmoney; 14-03-2013 at 11:39 AM.
    • outofmoney
    • By outofmoney 14th Mar 13, 11:38 AM
    • 906 Posts
    • 2,554 Thanks
    outofmoney
    • #7
    • 14th Mar 13, 11:38 AM
    • #7
    • 14th Mar 13, 11:38 AM
    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.
    Originally posted by Tottyshouse
    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!
    • HappyMJ
    • By HappyMJ 14th Mar 13, 11:50 AM
    • 20,595 Posts
    • 17,201 Thanks
    HappyMJ
    • #8
    • 14th Mar 13, 11:50 AM
    • #8
    • 14th Mar 13, 11:50 AM
    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.
    Originally posted by outofmoney
    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.

    Regular savers earn 6% interest (HSBC, First Direct, M&S) Loans cost 2.9% per year (Nationwide) = FREE money.
  • refreshed
    • #9
    • 14th Mar 13, 11:51 AM
    • #9
    • 14th Mar 13, 11:51 AM
    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.
    Last edited by refreshed; 14-03-2013 at 12:47 PM. Reason: spell
    • ruggedtoast
    • By ruggedtoast 14th Mar 13, 11:51 AM
    • 9,493 Posts
    • 20,145 Thanks
    ruggedtoast
    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.
    • theartfullodger
    • By theartfullodger 14th Mar 13, 11:57 AM
    • 10,317 Posts
    • 14,170 Thanks
    theartfullodger
    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).
    • Helen2k8
    • By Helen2k8 14th Mar 13, 12:02 PM
    • 349 Posts
    • 1,987 Thanks
    Helen2k8
    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.
    Originally posted by HappyMJ
    Did you consider that maybe that cheap 30% are FULL?
    • Takeaway_Addict
    • By Takeaway_Addict 14th Mar 13, 12:08 PM
    • 6,031 Posts
    • 6,991 Thanks
    Takeaway_Addict
    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.
    Originally posted by Percy1983
    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
    • Percy1983
    • By Percy1983 14th Mar 13, 12:11 PM
    • 4,990 Posts
    • 7,824 Thanks
    Percy1983
    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.
    Originally posted by Takeaway_Addict
    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.
    Last edited by Percy1983; 14-03-2013 at 12:21 PM.
    Have my first business premises (+4th business) 01/11/2017
    Quit day job to run 3 businesses 08/02/2017
    Started third business 25/06/2016
    Son born 13/09/2015
    Started a second business 03/08/2013
    Officially the owner of my own business since 13/01/2012
    • Frogletina
    • By Frogletina 14th Mar 13, 12:12 PM
    • 3,204 Posts
    • 11,586 Thanks
    Frogletina
    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.
    Not Rachmaninov
    But Nyman
    The heart asks for pleasure first
    SPC 8 #441 £1567.31 SPC 9 #441 £1014.64 SPC 10 #441 £1164.13 SPC 11 #441 £1598.15 SPC 12 #63
    • TopQuark
    • By TopQuark 14th Mar 13, 1:22 PM
    • 442 Posts
    • 1,064 Thanks
    TopQuark

    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.
    Originally posted by Percy1983
    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
    • Tiddlywinks
    • By Tiddlywinks 14th Mar 13, 1:56 PM
    • 5,351 Posts
    • 18,507 Thanks
    Tiddlywinks
    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.
    Originally posted by refreshed

    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.
    • sandsni
    • By sandsni 14th Mar 13, 2:34 PM
    • 675 Posts
    • 551 Thanks
    sandsni
    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.
    • podperson
    • By podperson 14th Mar 13, 4:00 PM
    • 3,064 Posts
    • 7,954 Thanks
    podperson
    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.
    Originally posted by HappyMJ
    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.
  • refreshed
    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.
    Originally posted by Tiddlywinks
    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.
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