Buy to let investors might be hit by many more tenants falling behind on their payments, the insurer warns.
Many tenants who rent their homes from buy to let landlords are struggling with their payments, insurer AXA has revealed.
A new study from the firm has found that 13 percent of renters have fallen behind with their payments over the past year. Disturbingly, just over half of this total had done so over the past three months - signifying that the problem is on the increase.
Further evidence that private tenant arrears is a growing trend is provided by the fact that 50 percent of renters polled by AXA said that they were becoming "increasingly concerned" about meeting their accommodation costs in the near future. The falling housing market and tightening credit have also played their part in the situation, with one third saying that they are only renting because they cannot secure a mortgage in the current economic conditions.
Failure of tenants to pay their rents on time has negative effects on landlords as well as tenants, AXA managing director Mike Keating pointed out. "On the surface of it…the rental market should be buoyant [due to the housing slowdown]," he commented. "But if you consider that many of those renting may be struggling to make ends meet it's certainly not all good news for buy to let owners."
Mr Keating added: "The cost of living is rising rapidly and average earnings are not keeping pace. And while rental rates appear to have dropped marginally in the last few months it's going to continue to be tough for many tenants."
