The warning comes from tenant eviction and rent collection firm Landlord Assist, following the YouGov poll for housing charity Shelter which revealed the rise in credit card usage to keep a roof over their heads.
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 said: “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 said: “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.”