Young renters 'scrambling to stay afloat and racking up debt' during pandemic

Young renters are “scrambling to stay afloat” and racking up debts while trying to pay rents, while it is becoming increasingly difficult for first-time buyers to get on the property ladder.

Charity Shelter said young adults are more in danger of homelessness than any other age group, due to costly private rents and insecure work.

Polly Neate, chief executive of Shelter, told the Yorkshire Post that the government needed to look at extending the temporary ban on evictions past June 29.

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She said: “Even at the best of times, young adults are more in danger of becoming homeless than other age groups as they’re more likely to be living in an unaffordable private rental or have an insecure job. And as the pandemic rages on, it’s proving even harder for many young people to keep up with their rent.

Young people who rent their homes are struggling to stay afloat, according to the boss of housing charirt Shelter

“Our services have heard from younger renters who are scrambling to stay afloat after their income has taken a huge hit or they’ve lost their job because of Covid-19. While they rack up debts that could put their home at risk, the end of the government’s evictions ban looms ever nearer.”

Join our new coronavirus Facebook group for the latest confirmed news and advice as soon as we get itRobert Winter, 25, has just completed his first year of a degree in international relations at Leeds University and is struggling to find the money to pay his rent during the summer.

Mr Winter, who lives in Leeds, is furloughed from his part time job organising holidays for visually impared people and bringing in far less than his outgoings.

With no financial support available over the summer for students and no right to access universal credit, Mr Winter said he will need to go into debt to pay his rent.

He said he fears “playing a constant game of catch-up” with his finances.

“It feels like I’m in limbo at the moment,” he said. “My original plan was to work as much as I could over the summer to get a head start on finances and rent. Maybe this will still be possible but I am not feeling very optimistic.”

This comes after research by advocacy group Generation Rent earlier this month found two-thirds of renters are worried about paying their rent over the next six months and 58 per cent are worried about being evicted.

A total of 15 per cent of those surveyed were already behind on their rent.

Nearly three quarters of households where the head of the household is under 25 are renting privately, and a further fifth are renting a social home, according to ONS data.

Young people who are looking to buy their first home are facing tough times as mortgage lenders have reduced the number of small deposit loans on offer and there are much fewer properties for sale.

This is further compounded as many schemes that previously helped first-time buyers have ended, such as the Help to Buy ISA, which closed to new applicants last year.

Additionally, interest rates are at their lowest in 325 years, which makes mortgages cheaper, but also makes it harder to save the sum needed for a deposit.

Concerned that house prices may plummet after the pandemic, lenders have been more cautious than usual about lending to people who only have a small deposit, dropping nine out of 10 deals for 95 per cent mortgages.

While it is tough to get a mortgage with a high loan-to-value ratio, this does not mean it is not possible for a first time buyer to get a good deal.

Andrew Milnes, head of the Mortgage Advice Bureau in Bingley, said: “For the right first time buyer there are still plenty of mortgage deals available. Lenders are conducting more background checks, particularly around the employers’ situation, for example whether someone is furloughed, whether they’re definitely going back to work, if they’re being paid 80 per cent or 100 per cent of their salary.”

One lender asked Mr Milnes to complete a “covid information form” for a client but he stressed that these forms were no more rigorous than standard due diligence.

Recent research by property listings site Rightmove showed Bradford was the cheapest city in the UK to buy where an average 10 per cent deposit was £8,995.

In some cities in the UK, including Leeds, buyer demand is up 18 per cent on levels in February, according to analysis by online listings company Zoopla, though the number of properties available is not matching that.

Richard Donnell, director of research and insight at Zoopla, said the research was “surprising given projections for a sharp rise in unemployment and a major decline in economic growth.”

He added that this higher demand was more a “one-off boost” than a long-term trend.

He said: “Millions of UK households have spent a considerable amount of time in their homes over the lockdown period and missed out on hours of commuting. Many households are likely to have re-evaluated what they want from their home.”

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