More tenants said falling behind on rent

LONDON (Reuters) - A growing number of private tenants are falling behind on their rent, potentially damaging the ability of landlords to pay creditors, insurance group AXA said on Saturday.

AXA said a survey conducted by YouGov on its behalf showed buy-to-let landlords hoping to hike rents to offset higher mortgage costs could be in for a shock as the economic downturn leaves tenants cash-strapped.

It said 7 percent of private tenants had slipped into arrears in the last three months -- just over half the number that had done so in the last 12 months.

More than half of all private tenants polled said they were increasingly concerned about being able to afford their rent, AXA said.

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

"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 is certainly not all good news for buy-to-let owners," he said.

The housing market is in the midst of a sharp correction after a decade-long boom, largely due to a global credit crunch, which has pushed up the cost and shrunk the availability of mortgage funding.

Benchmark house price indexes from mortgage providers Nationwide and Halifax indicate the average cost of a home has dropped by some 10 percent since last summer. Anecdotal evidence from estate agents suggests house prices may have already fallen by around double that.

Unlike owner-occupiers, buy-to-let landlords have the option of raising rents to offset costs. Job security is also less of an issue for buy-to-let landlords since they can access a growing pool of alternative private renters.