After conducting research into UK tenants, the housing charity Shelter has found that over the last year there has been a massive 50% increase in the amount of people paying their rent with credit cards. It appears that give the current economic climate, people are finding harder than ever to pay their rent and therefore are borrowing money to keep a roof over their heads.

The foreseeable problem is that once these tenants have maxed out their credit cards they will have exhausted all their options in terms of paying their rent, as paying with a credit card is seen as a last resort when it comes to rent. With the economy still in disarray the chances of getting a good rate on a personal loan, a pay rise or a better job are slim, meaning many tenants might face the prospect of not being able to pay the rent at all.

Of course not being able to pay rent is a devastating problem for the tenant but it can be equally damaging for landlords. Even for landlords who have asked for multiple references and credit checks, there is still the risk that their tenant will be made redundant and unable to pay.

There is however one way tenants can protect themselves from this situation and that is with Rent Guarantee Insurance. As simple as car or home insurance, Rent Guarantee Insurance pays out when tenants cannot pay their rent. Basically companies such as Just Landlords will charge you a small premium and if your tenants can’t pay their rent then your insurance will instead.

It may not be something you want to pay for long term or for all your tenants, but given the current economic climate it might just be worth covering a few of your less reliable tenants as who knows what could happen in the future!

This entry was posted on Tuesday, February 1st, 2011 at 4:41 pm and is filed under Insurance. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.