Tenants borrow to pay bills
Published by Liz Reeson for Two Rivers Housing in Housing and also in Bill Payments, Health, Local Government, Universal Credit
Hard-up families are borrowing money on a regular basis to pay their bills and keep their heads above water.
Most are taking out loans with family and friends, but the ease, speed and flexibility of this arrangement comes at a cost – the embarrassment of asking those closest to them for help.
The findings come in an anonymous survey carried out by Gloucestershire Affordable Housing Landlords’ Association*, which included Two Rivers Housing tenants. It wanted to find out how people are coping in the current financial squeeze and to see what sort of help might be arranged to help them budget better.
A total of 903 people completed the questionnaire, half of whom were housing association tenants. 147 of them rent homes from Two Rivers Housing in Gloucestershire and Herefordshire.
Most of the Two Rivers tenants who took part are in part-time work and almost half (47%) say they never borrow money.
However, of the 76 people who do, 15 take a loan at least once a month, 33 say they ask for help several times a year and 28 people do so annually.
Almost two-thirds (63%) of those borrowing need the money to pay bills, whilst a third say it covers one-off expenses, such as a car or replacing household items, eg washing machine.
Three-quarters borrow from friends and family, but 17 people (23%) said they had used a doorstep lender or an online payday loan company. One person admitted to using a loan shark.
Interest rates vary considerably with the majority paying between 0% and 30%. However, nine people (12%) paid anything between 31% and 200%, and three people said they were charged interest up to 3,000%.
Encouragingly, nearly half (47%) of people who took part in the survey said they ‘always’ or ‘regularly’ have enough money left over after paying their essential bills, but 38 people (27%) said they ‘rarely’ or ‘never’ had enough.
Garry King, Chief Executive at Two Rivers Housing said: “Our research shows the majority of people taking out loans are borrowing the money to pay their bills, and many of them are doing so every month. This is a real concern as it shows that they are not coping with the demands on their income and they regularly reach a pressure point where they need to find extra cash, just to get by.
“Fortunately, many of them can call on family and friends to help out, but this isn’t the same for everyone and there are a few horror stories of people borrowing from money-lenders who charge astronomical interest rates.”
The research also attempted to find out what type of financial assistance would be most helpful for those struggling to manage their money. Low-cost loans were the most popular choice (49%), 32% said they would appreciate advice, while 31% (27) said they would welcome savings accounts (‘jam-jar’) that would help them to budget.
"We have two advisors dedicated to helping tenants to budget carefully, manage their income and claim the benefits they are entitled to,” said Garry.” We will now compare the information from this survey with our housing association partners to see what more we can do to help.”