Arrears set to rise as tenants using credit cards to pay rent

Landlord Expert
By Landlord Expert January 13, 2011 08:26

Tenant defaults could soar over the next year amid reports that many have borrowed money on a credit card to pay their mortgage or rent over the past year, warns leading tenant eviction and rent collection firm Landlord Assist.


Their warning comes following an exclusive YouGov poll for housing charity Shelter which reveals a disturbing picture of more than two million people taking desperate measures with credit cards to keep a roof over their heads, a rise of more than 50% in the past year.


Despite experiencing a buoyant 2010 and demand for rental properties currently exceeding supply, tenant arrears have remained a real concern for landlords.


Those concerns are unlikely to have been eased in light of this stark news and with public sector spending cuts set to take their toll on employment and tenant finances in 2011.


Subsequently Landlord Assist is urging landlords to take precautionary measures to protect their business interests.


Graham Kinnear, MD of Landlord Assist says: “News of tenants paying for their rent with credit cards is worrying for landlords. By paying the rent with credit cards tenants are effectively swapping one debt for another and inevitably this may push some into a spiral of debt. The longer this trend continues the more we will see people struggle to cover their rents and end up in significant arrears with their landlords.


“We at Landlord Assist are concerned that this problem will only worsen especially as rents are expected to increase further this year. This combined with the VAT increase, expected rise in interest rates and Government spending cuts, the impact of which is likely to be felt hard over the coming months, will put tenants under increasing financial pressure.”


Stephen Parry, Commercial Director at Landlord Assist says “Rent arrears can seriously affect a landlord’s cashflow and ability to pay their own mortgage. Referencing is a key part of the letting process and we strongly urge landlords to reduce the likelihood of being exposed to arrears by referencing prospective tenants.


“Likewise we urge landlords to consider additional protection via a rent guarantee policy to safeguard them in the event that their tenant loses their job or suffers any other major change in their financial circumstances.”


Full referencing from Landlord Assist can be undertaken for as little as £9.00 and includes landlord and employer referencing together with a comprehensive credit report on the prospective tenant.


Landlord Assist also offers a Rent Guarantee scheme in cases where tenants default on payments and where properties require any remedial work to be carried out.


The policy pays landlords any rent arrears accrued whilst the tenant occupies the property and will pay 50% of the rent after the tenant has vacated the property, for a maximum of three months, in the event that repairs need carrying out prior to its re-letting.


The scheme is available with Landlord Assist’s Plus Referencing service for just £60 for a six month policy and £90 for a 12 month term. In addition, cover is available for existing tenants with a 90 day exclusion clause.


They can be contacted on 08707 662288 or via their website

Landlord Expert
By Landlord Expert January 13, 2011 08:26

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