1m households use credit card to cover housing costs

Tenant defaults could soar over the next year following new figures which found up to one million households have borrowed money on a credit card to pay their mortgage or rent over the past year.

According to a YouGov poll for housing charity Shelter, 8 per cent of people in working class jobs pay their rent or mortgage through credit card compared to 4 per cent of middle to upper-class people.

As much as 12 per cent of people in London use credit cards to pay their rent or mortgage.

Graham Kinnear, managing director of Landlord Assist, a tenant eviction and rent collection firm, said it was acting for a number of landlords where their tenants are considering bankruptcy as they have paid their rent with credit cards but now cannot maintain their finance payments.

“By paying the rent with credit cards tenants are effectively swapping one debt for another. The longer this trend continues the more we will see people struggle to cover their rents and end up in significant arrears with their landlords,” Kinnear added.

Shelter issued a warning to people about the dangers of using credit cards to cover their mortgage payments - which in a worst case scenario could result in the loss of their home.

It said: “Credit card companies have to recover their debts and are not subject to the same rules as mortgage lenders. Once they obtain a charging order on people’s property, credit card companies can go back to the court for a possession order to force a sale to recover the debt.”

People can receive debt and housing advice through Shelter’s website www.shelter.org.uk or call their free helpline on 0808 800 4444.