Financial exclusion of private tenants persists and needs addressing

New framework highlights best practice action for local organisations to adopt

Despite an overall fall in the number of financially excluded adults in the UK since the early 2000s, initiatives to tackle financial exclusion have largely focussed on social tenants, leaving private tenants overlooked. Now, eight per cent of private tenants (an estimated 650,000 people) are completely unbanked*. A new framework for local action offers guidance to local authorities, as well as community groups and landlords, recommending ways in which financial exclusion among private tenants can be successfully addressed.

The problems faced by some tenants in the private rented sector – high rent, lack of choice and poor quality accommodation – are compounded for tenants who are financially excluded. For example, being without a bank account significantly reduces the pool of properties available to these tenants, as it puts the use of letting agents and landlords who require payment by direct debit completely out of reach.

The Sliced Bread Consulting Ltd and Personal Finance Research Centre at the University of Bristol have researched best practice on how to address the issue of financial exclusion among private rented tenants. This work with local authorities and other stakeholders has resulted in the development of a framework for action which identifies five priorities:

  1. Build private tenants’ needs into local financial inclusion strategies. Existing financial capability initiatives targeted at social housing tenants should actively seek to engage and include vulnerable private tenants.
  2. Maximise use of existing contact points to identify private tenants who are at risk of financial exclusion. Private tenants can be harder to reach than social tenants, however local authority departments and local stakeholders (such as environmental health teams) are already in contact with private tenants experiencing or at risk of financial exclusion.
  3. Promote access to rent accounts and bond schemes. More widespread use of these schemes would enable tenants to more easily manage their finances and sustain tenancies.
  4. Embed financial inclusion and financial capability within housing support services. Support with financial capability, including operating a bank account, budgeting and dealing with financial difficulties, should be offered to vulnerable private tenants.
  5. Make landlords part of the solution. Landlords’ forums and partnership working should be promoted by local authorities.

The new framework for local action was funded by the Nationwide Foundation. Leigh Pearce, the Nationwide Foundation’s interim chief executive, said: “The growth and changing nature of the private rented sector means that the needs of tenants mustn’t be ignored. Among these are the difficulties facing those vulnerable tenants who are financially excluded and who have so far been absent from the financial inclusion agenda in both policy and practice. We would urge local authorities and community groups working in this area to consider the learning from the framework and embed it in their strategies and approaches.”

Claire Whyley, director of Sliced Bread Consulting said: “There is a common misconception that private tenants must have bank accounts in order to pay their rent. But private tenants are being left behind in the financial inclusion agenda and it is clear that those left behind are vulnerable on a number of dimensions. Stakeholders have told us about local schemes and projects already underway across the country and we hope that sharing these experiences will help facilitate local action elsewhere.”

This week, the Treasury announced that new basic fee-free bank accounts will be provided by most major lenders within the next year to help millions of people to manage their money.

Tackling Private Tenants’ Financial Exclusion: a Framework for Local Action can be accessed here:

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