Don't ignore rent arrears

A recent report by the housing charity Shelter suggests that almost two thirds of the population is struggling to pay their rent or mortgage, and nearly 1 million people have taken out payday loans to cover housing costs. 1.4 million people are potentially at risk of losing their homes as they have already fallen behind with payments, said the charity. Figures also indicate that 20% were constantly struggling to pay their rent or mortgage – a 44% increase since Shelter interviewed the same number of people in December 2011.

The charity said its research indicated that almost 1 million people had used a short-term fix in the form of a payday loan in the last 12 months to meet the cost of their rent or mortgage. A further 2.8 million had used an unauthorised overdraft, with 10% of those doing so every month.

Last year Shelter found a similar number of people using payday loans to meet their rent or mortgage payments. "It's shocking to think that so many families will be starting the new year with a huge weight hanging over them, trapped in a daily struggle to keep their home," said Shelter's chief executive, Campbell Robb. "Payday loans may seem like a quick fix, but the huge interest charges mean things can quickly spiral out of control. It is vital that anyone who is having difficulty paying their rent or mortgage gets advice now."

Separate findings from insolvency practitioners Templeton LPA showed that, while the number of tenants who were evicted in 2012 increased marginally from the year before, the number in serious arrears has remained more or less static. However, there were still 86,000 people in severe arrears: – defined as two months or more behind on their rent – in the last quarter of 2012. "Tenants' finances have suffered a grueling combination of rising living costs and rental inflation throughout much of 2012," said Paul Jardine, director and receiver at Templeton LPA.

"With many budgets balanced on a knife edge, a slight reprieve from rapid rent rises towards the end of the year has been very significant. But the recent strength of the labour market has played the biggest role in halting the upwards climb in the number of tenants in severe financial difficulty."

When  dealing with  debt, it’s important to know which should be paid first. Knowing which debts should take priority can help you to keep your home. Priority debts include: mortgage repayments for home owners and rent for tenants. Rent arrears could mean you are at risk of losing your home. If you have rent arrears or are struggling to pay your rent you need to take action.

It is always a good idea to tell your landlord or letting agent if you are having trouble paying the rent. They will notice that you haven't paid and are more likely to take action if you ignore the problem. Rent arrears are grounds to start legal proceedings for eviction, so your landlord or agent could take you to court to try to evict you and recover any money you owe.

Keeping your landlord or agent informed and offering a practical solution may delay or prevent eviction- it shows you are making an effort to deal with the situation. If your landlord or agent contacts you about your arrears, it is essential that you read their letters and/or respond to their phone calls. In most cases it will be in your landlord's interest to keep you on as a tenant if you have looked after your home and the payment problems are recent. Finding a new tenant can be costly and time consuming for a landlord, so dealing with rent arrears early will be in your best interest.

Parkinson Property

8th January 2012


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