Loan sharks double risk of eviction

Birmingham Trading Standard’s illegal money lending team, which covers 80 local authority areas in England, compared books of loan sharks operating in Cheshire with rent arrears figures from Weaver Vale Housing Association.

They found tenancies in jeopardy – where people owed more than £500 – doubled when the loan shark was operating, and started to fall after the illegal lender’s arrest.

Trading standards looked at data relating to 62 tenants who had borrowed from the loan shark. It found 21 tenancies were in danger of eviction during 2008, up from 11 the previous year, when the loan shark was not in the area.

After the loan shark stopped operating, in 2009, tenancies in danger of eviction fell back to 17.

Jacqui Kennedy, director of regulatory services at Birmingham City Council, said: ‘These figures really show the devastating effects illegal lenders can have on a community and also demonstrate that the effects accrue much quicker than they dissipate.

‘However, the removal of a loan shark clearly has a positive impact on rent arrears which is why our work with partners such as Weaver Vale is so important as together we can help people regain control of their finances.

‘This research forms part of a best-practice guide that will help focus future work with housing providers and we are continuing this type of research elsewhere as well as sharing our findings with housing providers and other partners.’

The 62 tenants had a total of £15,797 rent arrears between them in 2007, which increased by nearly £8,500 in 2008, to a total of £24,123.

The total amount paid monthly to the illegal lender by those in rent arrears was £2,484, an average per person of £51.76.

Sarah Saward, income management team leader at Weaver Vale, said: ‘We have been doing a lot of work with our customers to raise awareness about the dangers of loan sharks and to promote safer ways of borrowing, such as with a low-interest credit union.

‘We also want people to get into the habit of saving so they are less likely to borrow from unreliable sources at key times, such as Christmas or holidays.’

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