New research reveals that many tenants in private rented accommodation, Britain’s fastest growing housing sector, may be living in poor quality properties or struggling to pay their rent and household bills because they are suffering from financial exclusion.
The research, ‘Helping Private Tenants Achieve Financial Inclusion’, was funded by the Nationwide Foundation and Nationwide Building Society, and carried out by Sliced Bread Consulting Ltd and Bristol University’s Personal Finance Research Centre.
The research shows that being financially excluded exacerbates the perennial problems in the private rented sector, relating to unaffordable rents, limited choice of properties and poor conditions. As a result, financially excluded private tenants can find themselves living in unsuitable properties, in very poor and even unsafe conditions, but are unable to move because without access to financial resources the costs of moving are prohibitive.
They also express very real fears that, being unable to pay rent by direct debit, they will not find another landlord willing to take them on. As a result, people are ‘trapped’ in unsatisfactory properties that no longer meet their needs or those of their families. Many of those who took part in the research said that private rented properties didn’t ‘feel like home’ and the nature of short-term tenancies left them feeling insecure and isolated.
The research estimates that in 2009-102 one in ten private tenants, around 650,000 people, did not have a fully functioning transaction bank account. As well as compounding the risks and vulnerabilities associated with private rented housing, a lack of banking facilities can leave many tenants financially disadvantaged, experiencing restricted access to some goods and services, including home contents insurance and even extending to difficulties securing employment. They may also incur a ‘poverty premium’ because of the need to pay for everything in cash.
The research suggests the impact of financial exclusion may be worse for tenants in the private rented sector than those in social housing. The researchers say that, as a result of the current welfare reforms and the introduction of Universal Credit, it is critical that the needs of financially excluded private tenants are recognised and effectively addressed.
Lisa Suchet, Chief Executive of the Nationwide Foundation, said: “Financial exclusion compounds and reinforces the difficulties which already exist in the private rental market. More needs to be done to provide advice and support to this overlooked group. By funding this research, more is now known about the characteristics and specific difficulties facing vulnerable private tenants.”
Stephen Uden, Nationwide’s Head of Citizenship, added: “As an industry we need to show collective responsibility to support the financially vulnerable. With the phenomenal growth of the private rental sector over the last few years, it’s significant research like this that informs where we need to focus our attention and is another practical example of how Nationwide intends to help 750,000 people achieve a home of their own, whether owned or rented.
“We continue to develop innovative solutions to existing financial issues facing consumers, such as recently becoming the first mainstream buy to let lender to enable borrowers to offer their tenants contracts of up to three years, providing the option of greater choice and stability for both landlords and their tenants. Nationwide has also produced a free and independent online Landlord’s Guide clearly outlining what is expected of Landlords on matters ranging from tenancy agreements through to safety checks. Such practical help can make a real difference.”
Claire Whyley, Director of Sliced Bread Consulting Ltd, said “Private tenants have not received the attention they deserve in terms of policy and practical support to help people affected by financial exclusion. With the growth of the private rented sector and the challenges that some tenants face such as welfare reforms, we must find ways to provide financially excluded private tenants the help they need, or we will be leaving some of the most vulnerable people in our society to suffer the consequences without support.”
The Nationwide Foundation and Nationwide Building Society will continue to work with Sliced Bread in the creation of an Action Plan highlighting good practice and identifying the steps required to promote greater financial inclusion for private rental tenants.
