Communities and Local Government CommitteeWritten evidence submitted by Sliced Bread Consulting Ltd and the Personal Finance Research Centre

Sliced Bread Consulting and the Personal Finance Research Centre are conducting ground-breaking research into the financial inclusion needs of private tenants—a group that has been largely neglected in research and policy initiatives, to date. The project identifies the characteristics of financially excluded private tenants, explores their needs and the specific barriers they face in accessing and using financial services, and will develop effective solutions to reduce exclusion among this hard-to-reach group.


Private tenants now comprise one in seven of all households, and represent a growing proportion of all tenures.1 For many, private tenancy is a choice, usually temporary and closely related to life-stage. Although some may remain in private rented housing for longer than they would like, their housing tenure is unlikely to be indicative of disadvantage or vulnerability to financial exclusion. Evidence is growing, however, of a highly disadvantaged group of private tenants, including families, older people, benefit recipients, the low paid, and migrants who remain in the sector in the longer term,2 frequently out of necessity rather than choice. In 20089 41% of private tenants did not expect to become home owners in the future.3 This group is set to grow, with restricted access to mortgage finance and as former homeowners return to the private rented sector, possibly with significant debts and credit impairment.

Access to banking for vulnerable private sector tenants remains highly problematic, as a result of circumstances, risk factors and barriers that remain unknown. The widely recognised importance of banking exclusion as an indicator of wider financial exclusion4 means that this group is highly likely to lack access to a wide range of financial products.

Despite notable achievements in widening access to banking over the last decade, being a private tenant remains a bigger predictor of the likelihood of an adult living in an unbanked household than being a social tenant.5 The importance of private tenancy in predicting banking exclusion suggests that this group faces specific barriers to achieving financial inclusion in comparison with other excluded groups. As a result, private tenants—until now the “poor relation” in financial inclusion policymaking—are at risk of being left out of financial inclusion. Financial inclusion creates significant financial costs and barriers for vulnerable private tenants, making it harder for them to make ends meet; often forcing them to borrow from high cost lenders because they have few other options; preventing them from securing safe, quality rental properties; and making it harder to find legitimate employment.

Research Methods

The project uses a combination of quantitative, qualitative and consultative methods to deliver these objectives, including.

1. Bi-variate and multi-variate analysis of the Family Resources Survey and the Wealth and Assets Survey to identify key sub groups within the private tenant population that are vulnerable to financial exclusion and the factors that influence the likelihood of financial exclusion.

2. Focus group research with vulnerable private tenants to provide a detailed understanding of the attitudes, needs and experiences of private tenants in relation to financial services; the dynamics associated with access to financial services among them; needs and aspirations for financial inclusion; and overlaps in contact points with other financially excluded groups which may provide efficient points at which interventions could be adapted and targeted for private tenants.

3. A programme of stakeholder engagement and consultation, led by a Stakeholder Panel, to maximise awareness and influence, ensure that the project is informed by existing knowledge and expertise; and produce a Stakeholder Action Plan to meet the financial inclusion needs of private tenants.


The research phase of the project is now complete. The final report and the Stakeholder Action Plan will be launched in Spring 2013. A conference, to disseminate learning from the research, will be held in December 2013. An evaluation of the impact of the research will be completed by April 2014.

This Response

This response draws on early, as yet unpublished, research findings. The research team will be happy to discuss these findings, and the wider implications of the research, with you if that would be helpful.

Key Findings of Relevance to This Enquiry

The research indicates the existence of a highly vulnerable minority of private tenants who experience deeply entrenched financial exclusion, which causes hardship and creates barriers to full participation in society. One in ten private tenants do not even have a basic bank account and a further four in ten are banked but make only minimal use of their account. This group is rarely acknowledged by policy makers responsible either for housing or financial inclusion. In the context of the introduction of Universal Credit, it is critical that the needs of this group are recognised and addressed

Early findings from the focus groups are extremely helpful in providing evidence to correct some of the misinformation and misunderstandings around private tenants.

First, they demonstrated very clearly that private tenants are not all in the private rented sector by choice. Many had “fallen out” of other sectors, largely home ownership but occasionally from social housing, due to adverse life events, including serious ill health; relationship breakdown and entering prison. The remainder were longterm private tenants who had never had any alternative and did not anticipate being able to leave the sector in the short or medium term. Although some people could identify advantages of living in the private rented sector, largely relating to mobility, it was not the preferred tenure of the vast majority of people who took part in the focus groups.

Second, the groups established unequivocally that it is possible to rent privatively without having a bank account. At the outset of the project we encountered a number of people who believed that having a bank account is a pre-requisite for renting in the private sector. Although this is largely the case for higher income private tenants, it is not the case for vulnerable private tenants.

Third, the research illustrates that financial exclusion impacts as profoundly on private tenants as it does on social tenants. Indeed, in many respects financially excluded private tenants are more vulnerable than their counterparts in social housing, because they do not have a socially responsible landlord looking out for their interests.

Private tenants without bank accounts are extremely vulnerable

It is clear from the focus groups we conducted, that private tenants are an extremely vulnerable group. Many of the people we spoke to have ended up in the sector due to adverse life events, such as serious ill health, relationship breakdown, domestic violence, leaving the care system or having been in prison. Several had a history of quite severe debt problems, which may not have been resolved.

Unbanked private tenants face a number of additional problems which compound their vulnerability

They have very limited choice in terms of properties, landlords or even the area they live in—largely because of affordability problems; the stigma associated with being a benefit recipient; a shortage of landlords who accept payment of rent in cash; the conditions imposed by landlords who will accept cash including, for example, a refusal to accept tenants with children.

Many lived in extremely poor quality properties and, again, had limited potential to find better quality accommodation;

Repairs are a huge issue—most had had difficulties getting landlords to carry out repairs, several were living with quite serious problems, such as the lack of a working toilet for six months, collapsed ceilings and dangerously rotten floorboards.

Most felt very insecure about their tenancy—not everyone taking part in the groups had a formal contract with their landlord, the vast majority were on short-term tenancy agreements, aware that their landlord could increase the rent or terminate the agreement at six monthly intervals. They also felt vulnerable when the property they were living in changed hands, fearing that their new landlord could change the terms of, or terminate, their tenancy. Several said that they did not hassle their landlord to carry out repairs for fear that their tenancy would not be renewed.

Many remarked on the fact that they were living long-term in properties that “didn’t feel like home”, because they were not allowed to decorate or choose their own furniture, faced restrictions relating to pets and, sometimes, children, and often because the properties were of such poor quality.

Most said they felt “stuck” in their current property because of the costs of moving—including agency and admin fees as well as the need to find money for a deposit on a new property before their existing deposit had been released.

Providing Support to Private Tenants

The research demonstrates a clear need for support among vulnerable tenants, most of whom feel alone and isolated, with no safety net. Some felt that the Government views private tenants as young, affluent people who will move on to home ownership and is not aware that many live with extreme poverty and insecurity. They described themselves as being “at the bottom of the food chain”.

They need help with money and financial services, especially in the context of the introduction of Universal Credit which will require the majority of benefit recipients to receive benefit payments into a bank account , which they know little about and are not prepared for. They also need help to resolve problems with landlords, to ensure they are living in safe and secure housing. There is also evidence that vulnerable private tenants would benefit from support in relation to deposits—both in finding the money to pay them in the first instance and getting them returned at the end of the tenancy.

The full findings of this research will be published, along with a comprehensive Stakeholder Action Plan, in Spring 2013.

January 2013

1 See table 1 in

2 McKay S and Rhodes D Secondary analysis of low-income workers in the private rented sector, Department of Work and Pensions, 2010; Resolution Foundation, Meeting the Housing Needs of low-to-middle earners, 2011

3 English House Conditions Survey Headline Report 2008/9, Communities and Local Government, 2010

4 Kept out or opted out? Kempson and Whyley, 1999; Financial Inclusion – an action plan 2008-11, HM Treasury, 2007; On the margins, Whyley and Ellison, 2010; Financial inclusion evidence review: the costs of banking exclusion and the benefits of access to bank accounts, Whyley, 2010; Realising banking inclusion, Ellison, Whyley and Forster, 2010

5 Finney A and Kempson E Regression analysis of the unbanked Personal Finance Research Centre, 2009

Prepared 16th July 2013