by Mark Johnston
Tenants Still in Arrears.
Despite recent falls in mortgage interest rates, thanks to the funding for lending scheme, many first time buyers are still finding it difficult to get on the housing ladder.
About 4.5 million tenants expect to rent for the rest of their lives, according to Castle Trust, a housing investment firm.
In light of the fact that many would be buyers are struggling to raise a deposit in order to purchase a property of their own, many have turned to renting a property.
This has meant that rents have soared in the past year or so as many would be home buyers have remained trapped in the rental sector because they have been unable to raise the 20 per cent deposit typically demanded or meet lenders’ borrowing criteria.
Almost two thirds of 4,300 people living in privately rented housing in England who recently took part in a recent survey said that they are struggling to pay their rent or have fallen behind.
The total number of tenants thought to be in severe arrears to around 98,000, representing 2.4 per cent of tenancies in England and Wales.
Statistics have shown that around 3,000 private sector tenants have slipped into two months’ worth of arrears in the past three months.
New research has also revealed that the number of renters more than two months behind on payments rose by 4,000 to 94,000 in the first quarter of 2013 which isan increase of nearly 5 per cent. This represents 2.3 per cent of all tenants in England and Wales.
LSL Property Services therefore fears that the number of tenants in serious debt will “mushroom” further amid growing living costs.
Recent research found that some tenants were resorting to “drastic” measures like taking out payday loans and dipping in to their children’s savings just to hang on to their homes and pay their rent.
Analysis has also shown that at least one in seven renters have used a credit card to pay their rent and one in 17 have had to leave their rented home because of a rent rise, equating to almost 515,000 people across England.
Therefore some experts believe that until the rising cost of living begins to subside, the number of tenants in severe arrears is likely to grow even further.
However, in the first few months of 2013, thanks to the funding for lending scheme, lower mortgage repayments have allowed landlords more room for flexibility.
But while the current environment has allowed and continues to allow landlords more time in any given month to wait for a payment, it does not fundamentally change the ability of tenants to pay rent.
All this said it does appear there are signs that pressure could be taken off the rental sector as a report from the Bank of England has suggested that lenders are planning to make mortgage deals more widely available in the coming months, and their appetite for lending to home buyers with smaller deposits is beginning to return.
Story link - Tenants Still in Arrears.
Related stories to : Tenants Still in Arrears.