Your neighbour could be homeless by Christmas

Thousands face the threat of homelessness before the Christmas holidays.

Every two minutes between now and Christmas Day, someone in Britain will face the prospect of losing their home. That’s the findings of new research from the homeless charity Shelter, highlighting the struggles the housing market still faces.

According to the charity’s research, around 35,000 people face a battle to keep a roof over their head in time for Santa's arrival.

The charity has launched a campaign to highlight the plight of the hundreds of people each day who will receive a letter threatening them with homelessness, and the impact such an experience can have on their mental health.

Shelter’s research found that 61% of people who have either been homeless or faced the threat of homelessness said it had led directly to a stress related illness.

Repossession, repossession, repossession

Every quarter, the Council of Mortgage Lenders publishes figures on the number of repossessions that have taken place, and of late the message has been pretty positive, with the figures regularly being lower than expected.

As a result, people like me can get a little bit complacent about it. After all, the number of properties repossessed in the first half of this year was down 7% on the same period last year. Good news right?

Well yes, but that was still 18,100 properties that lenders took back from borrowers.

And that’s just the number of repossessions that actually took place, what about the borrowers who are simply being warned that if things don’t improve, they may lose their homes? There are currently 164,500 mortgages where the borrower is in arrears of more than 2.5% of the mortgage balance. Sure, that figure has fallen, but it’s still an awful lot of people who are seriously behind on their mortgage payments.

Undoubtedly, some of these people will have no-one but themselves to blame. Perhaps they told a few porky pies in order to get a larger mortgage than they should have, and now the chickens have come home to roost. But equally, plenty of them will simply be victims of circumstance, caught out by an economic crash that was not their fault.

Kicking out tenants

The situation is hardly any better in the rental market.

Social landlords are already reporting a rise in rent arrears following the government’s move to reduce housing benefit earlier this year. Meanwhile, research by the Financial Inclusion Centre earlier this year concluded that as many as three million renters are in a vulnerable position, either behind on their rent or struggling to pay it each month.

What’s more, with rents continuing their astronomic rise – barely a month goes by without one firm active in the rental market proclaiming a new record high – this is only likely to get worse.

We’ve never had it so tough

Last year, an adviser to the government, Lord Young, was forced to resign after an interview in which he suggested that as a nation, we had never had it so good (he’s back, with his own office in Number 10 now, by the way). A year on, that statement looks even more daft.

Inflation currently stands at a mammoth 5.2%, miles higher than the Bank of England’s stated aim of keeping inflation at 2%. And our salaries aren’t moving upwards at anything like that rate, if at all. Add to that the fact that job security continues to weaken, with unemployment now at a 17-year high, and it becomes clear that pennies have rarely been so tightly stretched. We can’t even rely on a return on our cash if we’ve managed to save in the past, with rates on savings accounts utterly underwhelming.

In fact, for some, it’s only the fact that interest rates are so low therefore keeping variable mortgage rates low too, that is keeping things from completely collapsing.

What to do

So, if you’re in a position where the bills are mounting up, and there’s little sign of things improving, what do you do?

Tackling your money issues early is always the best plan of action. And as BT used to say, it’s good to talk.

There are all sorts of charities and organisations which offer debt advice without charging. For example, there’s the Consumer Credit Counselling Service (CCCS), which write regular blogs for us here at lovemoney.com. Why not give their Dealing with Debt blog a scan, as it may contain some advice which is relevant for your situation?

It’s not just the CCCS though, there’s also Citizens Advice, the National Debtline, and a host of others. Check out Get debt advice for free for more on the different places you can get some guidance, and what they offer.

It’s also well worth having a chat with the firms you owe money. It may be that you can come to some sort of arrangement where you have longer to pay off the money you owe.

However, the absolute worst thing you can do is ignore your mounting debts, hoping that something will change and everything will be fine again. This ‘head in the sand’ attitude can end up making things a whole lot worse, and is utterly counterproductive.