16:15 PM, 4th January 2012, About 11 years ago 1
Landlords should brace themselves for a massive jump in rent arrears with the news that millions are seeking payday loans and other credit to pay rents after overspending during the festive season.
Homeless charity Shelter is warning a million homeowners and tenants are looking for payday loans that charge interest at rates of up to 4,000% APR to pay housing costs and other bills.
Millions of others are resorting to paying bills with credit cards – with 7% of credit card holders making mortgage and rent payments by card and 42% expecting to borrow on their cards to pay for food.
Shelter claims millions are facing debt to keep a roof over their heads – while landlords and letting agents claim they should pay priority bills like housing, energy and food before spending on festive treats.
Shelter chief executive Campbell Robb said: “These shocking findings show the extent to which millions of households across the country are desperately struggling to keep their home.
“Turning to short-term payday loans to help pay for the cost of housing is totally unsustainable. It can quickly lead to debts snowballing out of control and can lead to eviction or repossession and ultimately homelessness.
“Every two minutes someone in Britain faces the nightmare of losing their home. We urge every single one of these people now relying on credit to help pay their rent or mortgage to urgently seek advice.”
Consumer champion the Office of Fair Trading recently warned borrowers against taking payday loans and urged anyone with financial problems to seek debt advice.
The Post Office research revealed borrowers will be more reliant on their credit cards in January 2012 compared with 12 months ago, with 38% of cardholders planning to put at least £200 more on their account this month compared with January 2011.
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