Why obtain Rent Guarantee? – The rise of ‘The Working Poor’
As UK food banks hit a new record, cuts to working benefits coupled with rising inflation are leaving more and more working families struggling to meet the basic costs of living.
In one of the world’s richest nations it is absolutely scandalous that an increasing number of low income citizens are being forced to use food banks to survive, literally surviving ‘hand to mouth’ from paycheck to paycheck – aka The Working Poor.
Shocking statistics rule out the widely believed misconception that food banks are primarily helping the homeless or jobless.
For example, key findings on the circumstances of people referred to food banks via The Trussel Trust reveals:
- Financial and food insecurity: Almost half of households reported their incomes were unsteady from week-to-week and month-to-month. 78% are severely food insecure (meaning they had skipped meals and gone without eating – sometimes for days at a time – in the past 12 months), while over half could not afford heating or toiletries.
- Price rises: 3 in 5 households had recently experienced rising or unexpected expenses, with 25% of these saying higher food expenses were to blame, confirming the impact of food inflation on squeezed budgets.
- Housing: 28% of those who had experienced rising expenses said this was due to housing costs, such as rent or energy, going up. Tenants in private housing were more likely to find it difficult to keep up with rents than socially rented properties.
- Disability and mental health: Over 50% of households included a disabled person, consistent with the definition used in national surveys. 75% experienced ill health in their household. Mental health conditions affected people in 1/3 of households.
- Debt: 1 in 3 households were finding it difficult to make minimum monthly repayments on outstanding loans, and nearly 1 in 5 in debt owed money to payday lenders.
Further research also shows:
- The risk of poverty for adults in working households has increased by 27% over the past decade. Source
- More than half (60%) of people living in poverty in the UK live in a household where someone is in work. Source
- A couple on the National Living Wage now earns 13% less than the amount needed to provide essentials for their child. Source
- The cost of supplying the essentials needed to raise a child to his or her 18th birthday, excluding housing costs, rose 4% to £75,400 for a two-parent family in the year to April. Source
- 20% of children now live below the poverty line, according to the latest figures from the DWP.
With so many people just one pay cheque away from poverty, it is no surprise that Rent Guarantee Insurance for private tenancies is on the increase.
(As a landlord) If you manage to house a non paying ‘professional’ tenant, before long your bills can be astronomical. Gain an understanding of the possible cost of this by adding up eight months rent minimum (it takes most landlords at least 2 months to decide to evict), add court fees, bailiffs fees, your time, stress and energy. Don’t forget to add in the out of pocket expenses such as damage to the property, removed boilers, copper piping amongst a whole host of other damage that can be done. Environmental health visits and other activities can also delay the process by at least 12 months.
Having protection against this, in association with Tenant Referencing UK’s unique Tenant History Reports, is one of the best methods of insuring against misfortune and potential bankruptcy.
Furthermore, one of the biggest falls for landlords is when they get into the mindset of ‘The Tenant Seems OK’ scenario. The importance of renewing a Rent Guarantee Policy (click here for more info).