3.8 MILLION families could be just one paycheck away from losing their home, the housing and homeless charity Shelter has warned.
According to research by the charity, more than one-third of families would be unable to afford to pay their rent or mortgage in the event of becoming unemployed, because they have little or no savings to fall back on if they lost their job.
Shelter’s research is backed up by Government figures which show that 15 million working age adults have no savings at all.
Shelter draws attention to the experience of mum Kate Murray, who lives with her five year old daughter and disabled mother.
Kate lost her job in October 2013 when the business she worked for went bankrupt. She had already fallen behind on her mortgage because her employer wasn’t paying her properly. Kate later received a letter informing her that the mortgage lender was seeking to repossess her home.
Kate said: “They hadn’t been paying me properly, so I’d begun to fall behind on my mortgage. Then I got the letter through the door saying they wanted to take my house back. I was petrified. I thought what am I going to do? How am I going to tell my daughter and my mum that we have to move out?”
Responding to the research, Campbell Rob, Shelter’s chief executive said:
“No matter how hard ordinary families work, in today’s ‘knife-edge nation’ a drop in income can all too quickly put their home at serious risk. If you lose your job finding another one is hard enough, but without a stable place to live it’s almost impossible.
‘The government must make sure the safety net is strong enough to stop families falling through the gaps, and going through the nightmare of losing their homes.”
Citizens Advice Chief Executive, Gillian Guy, said:
“There is little or no room for manoeuvre for people with stretched household budgets. Many are still feeling the effects of the recession as low wages and high costs means people face a daily battle to make ends meet. A month without a pay cheque because of an unexpected redundancy or work drying up can easily prove disastrous.
“The loss of a home is all too real a threat for those only just managing to keep up with the rent or their mortgage. Last year Citizens Advice saw a 16 per cent rise in social housing rent arrears and a 26 per cent increase in threats of house repossession for social housing tenants.
“Changes to Housing Benefit and Council Tax Support have put some people in even more difficult financial positions. Enquiries about Discretionary Housing Payments to Citizens Advice Bureaux have risen by 110 per cent in just one year. More affordable homes need to be built to stop housing costs rising even further.
“Changes to emergency support mean many people don’t know where to go for help, and for some, the help they need is no longer there. The availability of support for people in crisis situations must be made crystal clear.”
Meanwhile, economists say wage rises are set to outstrip inflation for the first time in six years.
Wages are forecast to rise by 1.7% this year (1.8% including bonuses), higher than the Consumer Price Index (CPI) which currently stands at 1.6%, and experts say that wages will continue to rise above the rate of inflation up until 2017.
Peter Spencer, chief economic supervisor to EY Item Club, said:
“We are set for a long period of low inflation as pressures from commodity prices… remain largely absent.
“Growth in the workforce will restrain wage inflation, but not to the extent of impeding a recovery in real wages.
Re-enforcing the research by Shelter, Peter Spencer continues:
“We expect wage growth to overtake CPI inflation as early as April. Until now the recovery has been financed by a fall in the amount households save, but it appears to be moving to a firmer footing.”