Written by: Nicky Lowes

 

Research at Citizens Advice has shown that the prices of private home rentals are causing major issues for tenants who wish to buy a home in the future. The charity has additionally unveiled a surge in reports dealing with the guarantors of loans, many of whom have found that they owe thousands of pounds.

 

The extremely high cost of private home rentals are dashing the dreams of those who wish to own their own home in the future, with 78% of earners with salaries of over £50,000 reporting problems saving due to high living costs. The majority of these high earners have reported paying additional letting fees, at times paying upwards of £1,000.

Whilst the average deposit on a home for a first time-buyer is now being estimated as £30,000, the annual cost of private rental, outside of London, is averaged at £7,600. The steep cost of rent and any additional letting fees is preventing many from saving towards a deposit.

Citizens Advice supports the recent announcement of government plans to ban letting fees for tenants, but is urging authorities to improve and monitor the quality of privately-rented properties.

With over half of workers who earn over £50,000 each year reporting damp or mould in their current rented accommodation, it is clear that problems with low-quality rental properties are affecting even the highest earners in society.

A recent report by Citizens Advice suggests that the government should introduce a maximum timescale for landlords to carry out repairs and ban those who do not meet these requirements from renting.

 

The number of people reporting complications with their status as loan guarantors has risen 40% in the last year.

When people take out a loan, they are asked to provide a guarantor, a person who will take on the cost of the loan if the borrower is unable to repay it. Many of those who agree to be a person’s guarantor do not fully understand the risk that it entails.

Last year Citizens Advice dealt with 2,000 reports of loan guarantor problems. Many of those who asked the charity for advice had been suddenly hit with thousands of pounds of debt after borrowers had failed to repay loans.

One incident involved a father who guaranteed a £2,000 online loan for his daughter. Whilst he told his daughter that he would be her guarantor, the firm loaning money did not contact him to sign documents or explain the conditions of the loan. After his daughter failed to repay the loan, the man, who was unemployed, found himself unable to pay for the loan.

Another case dealt with by Citizens Advice surrounded a woman who was contacted by a bank about loan repayments, after her son’s ex-partner failed to repay a loan she took out. Whilst she agreed to guarantee the loan, no one had explained that she would have to take on the burden of its cost should the borrower fail to repay.

Citizens Advice is campaigning for all money lenders to provide guarantors with a letter of agreement, so that they understand what they’re signing up for.

 

If you’re having issues with renting or debt, please feel free to contact or drop-in to Citizens Advice Gateshead for free, independent guidance.