Britain’s Under-35s Struggle With Rising Housing Costs and Debt

For young adults across the UK, financial stability is becoming harder to achieve. Housing costs, insecure work, everyday bills and the lasting impact of Covid-19 are putting financial security out of reach.

In this episode of Debt Matters, we examine new research from the University of Bristol's Personal Finance Research Centre, developed with StepChange Debt Charity and funded by NatWest Group. We discuss what the findings mean for borrowers, lenders and the debt collection industry.

Borrowing just to keep a roof overhead

For some younger adults seeking debt advice, paying rent or meeting housing costs now means relying on credit.

Among StepChange clients aged 18–34 surveyed, 44% had borrowed money to cover housing costs. In the same group, 75% had first used credit before turning 21. These figures relate to surveyed debt advice clients, not all UK young adults, but they highlight the risk of becoming dependent on borrowing early in life.

When credit helps cover essentials rather than unexpected luxuries, repayment can become a cycle that is difficult to escape.

Working, but still unable to cover the basics

Employment does not always protect people from money worries. Around 49% of the 18–34-year-old StepChange clients surveyed said their income was insufficient to cover essential costs, even while working.

Job loss, redundancy and falling income were identified as leading drivers of debt problems among younger adults. One missed shift or unexpected expense can quickly lead to arrears.

The pandemic's financial shadow

The impact of Covid-19 did not end when restrictions were lifted. The research found that 34% of UK adults aged 18–34 felt the pandemic had harmed their career progression, compared with 23% of those aged 35–49 and 16% of those aged 50–64.

Mental health has also been affected: 52% of UK adults aged 18–34 reported a negative impact from the pandemic, against 39% across the wider population. These overlapping pressures matter when considering how people manage money, seek help and respond to debt collection contact.

Financial independence is slipping further away

Among UK adults aged 18–24, only 49% said they could afford basic living expenses month to month. Just 19% described themselves as financially independent from parents or other relatives, compared with 57% of the wider adult population.

For many, that can mean postponing a move out of the family home, delaying long-term plans or relying on informal support to stay afloat.

What this means for UK debt collection

Debt collection is not just about recovering outstanding balances. It also involves understanding affordability, recognising vulnerability and helping people find realistic routes back to stability.

In this episode, we explore:

• Why younger adults are increasingly using credit for essential housing costs.
• How early borrowing can shape long-term financial resilience.
• Why employment alone may not prevent debt difficulties.
• The importance of fair, affordable repayment arrangements.
• How lenders and collectors can communicate with financially vulnerable customers.
• Whether earlier debt advice could prevent manageable arrears from escalating.

Can the cycle be broken?

The findings raise difficult questions about access to affordable housing, income security and the availability of timely financial guidance. They also remind the collections sector that sustainable outcomes depend on more than immediate repayment. Who should take responsibility for meaningful change?

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