Amidst soaring rental costs, nearly one-third of UK renters have turned to state benefits to make ends meet, according to new research from Creditspring.
The Office for National Statistics (ONS) reports that average rents have surged by 8.9% over the past year, adding over £100 to the monthly burden for tenants. This financial strain has led 30% of renters to increasingly rely on benefits, a stark contrast to the 12% of homeowners who have claimed state support and the 13% expecting to do so.
The financial instability among renters is at an all-time high, with 37% indicating that their current situation is the most precarious they’ve ever faced. In comparison, 24% of homeowners reported similar feelings of financial instability.
To cope with these escalating costs, one-third of renters are considering taking up a side hustle or second job, compared to 22% of homeowners. Additionally, 13% of renters are contemplating moving back in with their parents due to unaffordable living expenses, a figure that rises sharply to 25% among younger renters aged 18 to 34.
Creditspring’s findings also highlight a growing reliance on credit among renters. A fifth (19%) have borrowed to cover essential bills, compared to 11% of homeowners, putting them at greater risk of long-term debt. This trend is underscored by the fact that over 21% of renters have taken out new credit cards in the past year, compared to 14% of homeowners, exposing them to the high costs of borrowing.
UK Finance data reveals that the nation’s total credit card debt has swelled by £4.5 billion in the last 12 months, reaching £64.78 billion, with an 8.9% increase in credit card spending.
In light of these pressures, 17% of renters have sought advice from debt charities, compared to 11% of homeowners. Creditspring warns that this number is likely to rise as borrowing levels continue to increase.
Neil Kadagathur, CEO of Creditspring, expressed concern over the dire financial situation facing renters. “As rental prices have soared in recent years, many renters have raided savings pots and borrowed to make ends meet. After exhausting those options, many renters are now forced to turn to benefits to meet their monthly bills,” he said.
Kadagathur added, “Faced with ever-growing essential costs, many renters have little option but to borrow each month to keep pace with rising rents – a vicious cycle where debt piles soar but savings vanish. This is driving many into unsustainable levels of debt and has forced growing numbers to return to family homes as they simply cannot afford to continue to live independently.”
As the cost of living continues to rise, the financial plight of UK renters appears set to deepen, prompting urgent calls for policy intervention and support.