Nearly one in six renters missed an essential payment in a single month

Almost one in six renters missed an essential payment in a single month, Which?’s latest Consumer Insight Tracker finds, as the consumer champion calls on essential businesses to do more to support people through the cost of living crisis.

Overall, an estimated 2.4 million households missed or defaulted on at least one mortgage, rent, loan, credit card or bill in the month to 12 January. This is on a par with the levels of missed payments seen throughout most of 2023, but it is a sharp rise from the estimated 1.8 million households who missed payments in the month to 8 December.

This volatility in missed payment rates around the Christmas period was also seen in previous years – possibly reflecting abnormal spending patterns over the festive period.

Missed payments were particularly high among renters – with almost one in six (15.9%) renters surveyed missing at least one rent, loan, credit card or bill payment in the month to 12 January.

A significant number of mortgage holders surveyed also missed essential payments in the month to 12 January – 6.8 per cent – as Bank of England interest rates remain high.

On the other end of the scale, just 2.8 per cent of outright owners missed an essential payment.

Worryingly, of the just over 200 Universal Credit recipients in the sample, a quarter (24%) reported having missed or defaulted on a payment.

Bills remained the most common type of payments for households to miss (5.1%), followed by loan or credit card payments (4.4%) and then housing payments (2.7%).

Of those who missed a household bill payment, the most common bill type missed was an energy bill (56%). Other commonly missed bill payments were council tax (36%), water (30%), phone (29%) and broadband and/or TV package (29%).

Six in ten (58%) households reported making at least one adjustment to cover essential spending such as utility bills, housing costs, groceries, school supplies and medicines in the last month. This equates to an estimated 16.5 million households.

Adjustments include cutting back on essentials, dipping into savings, selling possessions or borrowing. This is slightly higher than the levels seen the previous four months (53%-56%) and the same as the 58 per cent seen last January.

Consumers’ confidence in their current household finances fell slightly this month to +13, down from +17 last month and +21 in September. Current household confidence has steadily declined throughout the cost of living crisis.

One woman from South East England said: “Everyday is stressful. We worry about money constantly. [We] rarely use the heating … We are not living, we are existing at this point. No holidays, no luxuries, just stress and worry.”

One man from Eastern England said: “It is causing major stress and depression. I have totally lost my social life.”

Another woman from the West Midlands said: “I’m cutting back on the amount of food I buy, I only have one meal a day, I don’t put the heating on and I limit myself to no longer than 7 minute showers and only 3 a week.”

However, consumers’ confidence in the future of the economy and their future household situation rose slightly – with people giving the recent cuts to National Insurance and anticipated increases in their wages and State Pension as reasons for optimism. Consumer confidence in their future household situation rose from -14 last month to -6 in the month to January 12th and confidence in the future UK economy increased to -26 from -35 last month.

Despite this improved optimism about the future, these figures remain net negative, showing the majority of people still think these measures will get worse over the next 12 months. Only about one in five (22%) consumers think the UK economy will get better over the next 12 months, while almost half (48%) believe it will get worse. For future household finances, just a quarter (24%) think theirs will get better and three in 10 (30%) believe theirs will worsen.

With interest rates still high, consumers are likely to continue to face financial pressures throughout 2024. If people are missing or struggling to afford essential payments – such as energy, credit card or mortgage payments – then they should speak to their provider immediately for help.

Which? is also calling on essential businesses – energy firms, broadband providers and supermarkets – to do more to help consumers struggling to make ends meet and ensure they are providing value for money.

Rocio Concha, Which? Director of Policy and Advocacy, said:

“It’s very worrying that missed payment levels are still so high – with almost one in six renters missing an essential payment in a single month. We’d encourage anyone who’s struggling to seek free debt advice and reach out to their landlord for help.

“As so many people face financial hardship, Which? is calling on businesses in essential sectors like food, energy and telecoms providers to do more to help customers get a good deal and avoid unnecessary or unfair costs and charges during this crisis.”