Just over a quarter – 26% – had to take loans from family and friends, while 24% turned to buy now, pay later (BNPL) schemes, and 21% were dependent on bank overdrafts.
Overall, 70% of young adults have turned to at least one form of credit just to cover housing expenses.
Survival borrowing catch-22
Money Ready said many of these adults subsequently found themselves in a debt spiral.
As a result of ‘survival borrowing’, it created a ‘catch-22’, with many facing barriers to further borrowing.
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The charity found that 27% of young adults reported they wish they had been taught how to build and maintain a good credit history before entering the housing market.
During housing applications, 54% of respondents said they had not fully gauged how their credit history impacted rental or mortgage applications.
Money Ready’s research was supported by the Berkeley Foundation. Sally Dickinson, head of the foundation, said: “This research highlights the severe financial strain young adults are experiencing just to maintain basic housing stability. Relying on short-term credit to cover rent and bills is an unsustainable reality for far too many young people across the UK.”
Becky Young, director of fundraising and communications at Money Ready, commented: “The prevailing thought that young people fall into debt because of luxury spending or lifestyle choices is a total myth. They borrow to keep a roof over their heads. When a third of young adults are relying on credit cards just to pay their rent or essential bills, it is clear that the system is broken.
“There is a vicious cycle of having to borrow to stay housed today, which damages credit scores and ends up locking young people out of secure housing in the future.”
