Change to debt patterns ‘leading to more lodgers being taken on’

The depth and persistence of Britain's economic problems has led to more people resorting to taking on lodgers to make ends meet, an expert has noted.

Director at rental site SpareRoom Matt Hutchinson said a lot of people imagined that after the credit crunch and recession matters would return to how they were before, but have discovered that this has not happened.

He remarked: "It wasn't the case of a two or three-year blip before normal service was resumed; it is changing the way that we borrow money.

"That has left a lot of people realising that they are financially worse off than they expected to be. For most people the biggest asset that they have got is their home."

Mr Hutchinson said that while the need for people to rent out rooms has risen, so too has demand, partly because of a shortage of standard rental accommodation and also because the negative image renting may have had in the past has dissipated.

But while this may offer those with a room to rent out some extra income, for people who have not got such an asset tackling debt could be much harder.

In such cases, help such as a debt management plan or even an individual voluntary arrangement (IVA) could be required, with the latter being possible for those owing around £15,000 or more.

An IVA works by reducing monthly repayments to a more manageable level, which are made over a period not exceeding five years. After this anything left owing is written off.

To be implemented, the deal needs to be accepted by at least 75 per cent of creditors and will still count as a form of insolvency.

Figures on the number of live-in landlords in the UK from Easyroommate this week indicated the number has risen by 19 per cent in the past six months.

By James Francis