Are your tenants using Payday loans to pay rent?
They are the perfectly legal way to obtain a short-term loan, but landlords should beware of the tenant using so-called ‘payday’ loans to make up the shortfall in their rent every month.
New figures from YouGov have revealed the full extent of the reliance on high street money lenders by private tenants and the figures make for eye-watering reading. YouGov revealed:
• Almost a million people used a payday loan to help pay their rent or mortgage.
• 2.8 million people used an unauthorised overdraft to help pay their rent or mortgage.
• 10% of the 2.8M used an unauthorised overdraft every month.
Payday loans can be a headache for private landlords because the huge interest charges imposed on tenants who take them out mean finances can quickly spiral out of control. Soon the tenant becomes in a vicious cycle of debt which grows and grows. Ultimately, for the landlord that means eviction proceedings and lost income.
In such a situation the legal costs can be expensive but our Legal Expenses & Rent Guarantee Policy can shelter landlords from lost income and provide extra peace of mind should the worst happen.
About the authorEddie Hooker has been involved in the insurance industry since 1985. He worked with many large insurers such as Legal & General and AXA Insurance prior to setting up his own insurance business, Hamilton Fraser, in 1996. Hamilton Fraser now employs over 130 staff out of their North London office, dealing with various insurance products for the buy-to-let property market such landlord insurance, rent guarantee insurance, emergency cover and tenancy deposit protection.
Eddie and Hamilton Fraser Insurance first started to provide landlord insurance as early as 1996 when they became involved with the Small Landlord Association, which later became the National Landlords Association.
By working closely with the industry’s leading companies Eddie and his team have built up a detailed understanding of the landlord market ensuring that the customer experience is founded on knowledge and support. This has been highlighted in a recent customer survey that found that 95% of Hamilton Fraser customers were either satisfied or more than satisfied with the service provided by the company.
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