Prioritise your rent this Christmas season
So now that the Halloween costumes have been packed away for another year, and the fireworks have all been let off, we see the aisles of our shops filled with tempting offers on food and gifts. E-mails galore with tempting sales, 50% off, and every other ad we see on telly is showing us just how magical Christmas can be if we buy gifts, decorations and new party clothes. But stop just for a minute and remember that old saying ‘money can’t buy you happiness’. Yes it may put smiles on faces for a while, but once the bills start coming in smiles will soon turn into tears and worse, so please don’t spend money you haven’t got.
Don’t think of me as ‘bah humbug’ when it comes to Christmas. I love it, and as a mother yes I want every Christmas to be magical, but not at the cost of my health or my home. I’m a pragmatist so paying the rent and bills comes before buying gifts.
This week we are running a series of blogs where we will hear from just some of the organisations who see the ‘real consequences’ of overspending at Christmas, along with some tips on how to avoid getting into debt at Christmas time, and who to speak to when things get out of control.
Today, we start the blogs with one from Steve Clarke, Managing Director, Welsh Tenants.
In the course of our work we frequently meet people who have stories to tell regarding a particularly traumatic time in their life. As you would expect from an organisation that represents people who rent their accommodation, these often involve sad and preventable homeless stories.
In the past 3 months (July/Sept) 11,267 landlord possessions were undertaken in England & Wales. In Wales alone, more than 5,054 evictions passed through Her Majesties Court Services in 2014-15. These occur when pre-court actions have failed, and often reluctantly, the landlord or letting agent serves notice to quit as outlined in the tenancy agreement.
The nature of the private rented sector however, means there are also thousands of hidden tenancy terminations that do not make it to court or use these formal processes. These uncontested cases occur because either the tenant is unaware of their rights or simply that the tenant may not want to harm their credit worthiness, so move-on is agreed by mutual consent.
One such process occurred when the rent was missed for a month by a young couple represented by Tom [not his real name]. “The landlord was a good landlord, friendly, helpful and polite, and had always done repair requests in quick time”. In this particular case an agreement was made to catch up on missed rent when Tom received his Christmas bonus after falling into arrears in October (2014). However in November, Tom fell ill, which meant that the pending Christmas bonus didn’t materialise and the little savings the couple had were quickly depleted.
Tom took out a short term loan to see the couple over the Christmas period, but when January rent was due, they were not only in further rent arrears, but also short for January’s rent too. Council tax was also missed in October which meant that a county court process had begun to recover the remaining year’s council tax. Tom took out a second pay-day-loan but very quickly incurred penalties. With arrears at over £900 and a county court order for £840 meant that all of January’s pay was accounted for, however the landlord lost faith and reluctantly asked them to leave.
With the realisation that the situation could no longer be sustained and with nowhere to store their belongings they registered as homeless with their local authority. Fortunately Tom’s family stepped in and offered them a room complete with temporary storage of some of their essential items with the remainder being sold or given away. The deposit was challenged to no avail and took an age to resolve as well as county court judgement against them for the remaining debt not covered by the deposit.
By the end of March the couple had no home of their own, two court judgements and finding it difficult financially to get another private let. Several months later, the strain of living out of one room meant that the relationship ended and they both parted.
In just a few short months, a happy life had been turned into a life changing event for them both. Tom approached Welsh Tenants for help because he was finding it difficult on minimum wage to find the 2 months deposit now being required by a letting agent and a month in advance, totalling more than £1200. His poor credit history was cited as an issue for them.
Reflecting on his circumstance, Tom was very candid. The primary issue as Tom stated, “they over spent at Christmas and had not prioritised their rent, and from there on everything just went downhill”.
As we approach Christmas there will be thousands of renters in similar circumstances. The almost constant theme in these cases is the non-prioritisation of rent from their income. If the rent is secured first, other issues can always be resolved. Not doing so, means that things can quickly escalate and get out of control. Tom reckoned that missing one month’s rent eventually cost him in excess of £2,400 because of the sale of his goods and the penalties incurred. For someone on average income this is a huge sum from which to recover from.
Rent is now the biggest expense people have to pay from their income, in some cases more than 40% of income is not uncommon. Coupled with council tax it is the most significant expense that must be paid if you want to preserve your independence. While there is rarely a single issue that precipitates non-payment, it is still the major cause of all evictions. If you do have difficulties you should always seek early help from CAB, Shelter, or local financial inclusion schemes such as ‘Your Money, Your Home’.
So please learn Tom’s lesson, enjoy your Christmas, but not at the expense of your home. Adopt a ‘rent first’ approach at all times and preserve not only your assets, but perhaps your relationship too.