Struggling Generation Rent Is Being Driven Into Debt

With a soaring number of tenants falling into financial difficulties as they battle increasing rental costs, charities have identified a “worrying trend” of escalating debt for those who are frozen out of home ownership. Debt charity StepChange says the number of renters contacting it with difficulty paying off debt in the four years to 2015 more than doubled, rising by 139%. The average sum owed is £10,829 each, made up of unsecured debts including overdrafts, loans, credit card debt and rent arrears – which have reached an all-time high of £922. Figures from separate findings by charity National Debtline show that the number of people seeking help with rent arrears doubled, to 14% of callers, over the past five years. Read more on the Observer website.

U.K. Should Buy Homes to Stimulate Economic Growth

The U.K. government should set up a body to buy homes to help Britons reduce their debts and increase spending, according to Royal Bank of Scotland Group Plc (RBS) economist Richard Barwell.  Current policies are limited in their ability to stimulate the economy as Britain is being held back by a “balance-sheet recession,” Barwell said. The proposal would target homeowners who are holding back spending because their mortgages are worth more than the value of their property or who don’t have much equity in their homes, he said.  “If that fraction of the mortgage population is sufficiently large, then when coupled with those households struggling with the burden of unsecured debt, we could arrive a material fraction of the population that may be unwilling to increase spending in response to monetary stimulus,” he said.  The program would see authorities setting up an institutional buy-to-let investor to which individuals could sell their property, remain as rent-paying tenants and use the proceeds to pay down their mortgage, Barwell said.  Read more on the Bloomberg Businessweek website.