Brits fall into rental black hole

The private rental market could be heading for a bumpy ride over the next few months, according to the latest research from AXA.

While the Council of Mortgage Lenders (CML) today reports the number of homeowners slipping in mortgage arrears has increased – at 1.33 per cent of all mortgages, up from 1.10% at the end of 2007 – AXA warns the rented sector could also be suffering financial woes.

According to research from the insurer, the number of private renters slipping into arrears because they simply can't afford the rent is rising.

Some 13 per cent of renters have gone into arrears in the past 12 months, with over half of these (seven per cent) doing so in the past three months alone.

And the future does not look much brighter - with over 50 per cent of those already falling behind increasingly concerned about being able to afford their rent going forward.

"Our research shows that over a third of people privately renting are doing so because they can't get a mortgage at the moment," explained Mike Keating, managing director of personal loans intermediary at AXA.

"On the surface of it, this looks like the rental market should be buoyant. 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."

The AXA research also reveals 95 per cent of those in privately rented accommodation have no kind of income protection to help out if their financial situation was to alter through losing their job.

This could leave tenants exposed to the possibility of eviction if they suffer from increasing levels of unemployment presently witnessed in the UK economy.

"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," concluded Mr Keating.

Chris O'Toole