Landlords warned that renters will struggle to pay rent

Tenants will struggle to pay their rent and bills as growing numbers of them are already cutting their food budget because of the cost-of-living crisis.

The warning comes from Sarah Coles, a senior personal finance analyst at the financial services firm Hargreaves Lansdown.

Sarah points to data from the Office for National Statistics (ONS) on how people are reacting to the cost-of-living crisis.

Spend 31% of their income on rent

The ONS data shows that tenants are less likely to have wiggle room in their budget because they spend 31% of their income on rent, compared to mortgagees who spend 18%.

Renters are also being hit harder by rising prices, especially by hikes in rents, and they are twice as likely to say their housing costs are rising – 33% compared to 16% of those with a mortgage.

The ONS figures show that around half (46%) of renters have cut back on food and essentials – compared to 33% of those with a mortgage and 27% of those who own outright.

They are also four times as likely to be behind on their energy bills than those paying a mortgage (8% v 2%), and they’re more than four times as likely to be behind on their housing costs (4% v less than 1%).

Tenants are also more likely to be borrowing more – 29%, compared with 19% overall, and they have less to fall back on too – 50% of renters couldn’t afford an £850 expense out of the blue, compared with 29% overall.

‘Renters are being forced to cut back’

Sarah told Property118.com: “It’s a really worrying sign that renters are being forced to cut back in order to try to manage their rising housing costs and bills.

“It’s only a matter of weeks before we expect another significant hike in energy bills which risks pushing them to breaking point.”

She added: “At the moment, 4% of renters are behind on their rent, which is worrying enough in itself and is significantly higher than the proportion of mortgage borrowers who have fallen behind.

“However, 54% say it’s either very difficult or somewhat difficult to pay the rent – compared with 35% of those paying a mortgage who say it’s very, or somewhat difficult to meet this cost.

“It means rising prices are likely to push even more renters over the edge.”

‘Things are only going to get worse’

Sarah said: “Unfortunately, it appears that things are only going to get worse.

“The HL Savings and Resilience Barometer forecasts for the coming year make for worrying reading for both tenants and mortgagees.

“Those on the lowest incomes and renters will be hit much harder by the cost-of-living crisis than those on the highest wages and will see far more damage done to their overall financial resilience.

“With less to fall back on, they’re more likely to wipe out any lockdown savings and build up even more in debt and arrears.”

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