Shelter warns against using payday loans for housing costs

05 January 2012

Written by Jenny Barrett

Around one million people in Great Britain took out payday loans to meet housing costs - such as rent or mortgage repayments - in the last 12 months.

This is according to a survey undertaken by YouGov on behalf of Shelter, which indicated almost seven million individuals have utilised some form of credit, such as overdrafts or bank cards, to meet these expenses.

A total of 4,014 British adults were asked during December 2011 whether or not they had borrowed to help them pay for accommodation in the last 12 months, with 15 per cent reporting that they had.

Furthermore, two per cent admitted they had utilised payday loans, which can be extrapolated to represent 936,000 members of the public nationwide using figures from the Office for National Statistics.

Citizens Advice chief executive Gillian Guy recently pointed out these loans are more likely to be taken out by those with long-term financial problems and with other debts than those who are managing their income more successfully.

Some individuals "see their debts balloon and are offered multiple rollovers", before being subjected to aggressive collections when they fail to meet their payments, she continued.

People looking for a buy to let mortgage calculator and other landlords may wish to advise their tenants to seek advice from organisations such as Shelter if they realise they are turning to this option to meet rental payments, as the organisation's chief executive Campbell Robb noted these spiralling loans can quickly snowball, becoming out of control and might result in people being evicted or having their home repossessed.

"Turning to short-term payday loans to help pay for the cost of housing is totally unsustainable," the representative stated, adding: "We urge every single one of these people now relying on credit to help pay their rent or mortgage to urgently seek advice."