Landlords Ready for Massive Rise in Rent Arrears

by Property118.com News Team

16:40 PM, 19th January 2012
About 9 years ago

Landlords Ready for Massive Rise in Rent Arrears

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Landlords Ready for Massive Rise in Rent Arrears

Landlords are bracing for a flood of rent arrears cases as renters struggle with their bills over the festive period.

Housing charity Shelter claims around one-in-three renters have to make a tough choice between paying their rent or spending on food.

The number is up 44% since 2008, as families and individuals have juggled their finances to cope with rising living costs while earnings have stayed the same, says the charity.

If the figures were projected nationally, around 16 million households are trimming their spending on essentials and 10 million are switching off their heating to cover the rent, reckons the charity.

Campbell Robb, chief executive of Shelter, said: “These staggering findings show just how many millions of people are cutting back on essentials as the continued squeeze on incomes starts to really bite.

“It demonstrates the tough choices families are now having to make, between heating their home, putting a decent meal on the table or paying for the roof over their head.

“Every two minutes someone in Britain is at risk of losing their home. We strongly urge anyone struggling to pay their rent or mortgage to seek advice as early as possible.”

Households have faced high living costs and many people have lost their jobs over the past year, mainly due to rising fuel bills, spending cuts and last year’s VAT hike from 17.5% to 20%.

However, the largest drop in inflation in nearly three years was reported this month and the Bank of England expects the rate to continue falling over the next year to ease prices.

Several utility firms have also announced a drop in prices due to take affect soon.

The latest figures on buy to let rent arrears from LSL Property Services, the UK’s largest letting agent, show nearly 12% of all rent unpaid or paid late in December – up from 10% in November.

Rent arrears total £276 million, the highest level since December 2009.


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Comments

Ben Reeve-Lewis

8:58 AM, 20th January 2012
About 9 years ago

Regular readers will know I have been predicting the post Xmas rent arrears debacle since November.

YouGov published a report yesterday showing a third of people cutting back on food and fuel to pay rent and this is at a time when mortgage interest rates are at an all time low. When the interest rates finally rise where are landlrods going to go to find the extra money? To their tenants who are already cutting back on food and fuel?

When tenants cant afford the rent the landlord cant afford the mortgage, It isnt rocket science seeing where this is heading.

And yet weve been here so many times before

Ian Ringrose

9:52 AM, 20th January 2012
About 9 years ago

Interest rates for people that took out base rate tractor mortgages
a few years ago are at an all-time low. 
However interest rates on new BTL mortgages don’s seem to be not much
lower than they were 5 years ago, as the spread the banks demand over base rate
has increased greatly.  

Landlords are making very mixed profits depending on their mortgage
and when they were taken out, but very few landlords can buy more properties without
having to pay high mortgage interest rates.   (So the supply of rental props is not
increasing at the rate that the current profits of some landlords would normally
lead to.)

I don’t think the Bank of England will put up base rates
until the banking system is in a better state, by then banks will be demanding
a lower spread over base rate, so the costs of a new mortgage may not go up
much at all.

So Ben, we do live in very interesting times

11:46 AM, 20th January 2012
About 9 years ago

I see you having to order a bigger IN tray BEN!!!

Ben Reeve-Lewis

11:49 AM, 20th January 2012
About 9 years ago

Haha yeah, I feel like the Welsh Guards at Rourke's Drift waiting for the inevitable onslaught

14:47 PM, 20th January 2012
About 9 years ago

Just to be historical it was the South Wales Borderers!
I must have watched that film about 10 times now!!!
Also it may be of interest to you but someone was posting that they had not been told about the LHA changes of the ages by Lewisham council
Go onto propertyhawk.co.uk and on the left hand side click on LHA -train crash and someone is moaning about Lewisham council etc

Ben Reeve-Lewis

14:57 PM, 20th January 2012
About 9 years ago

Paul out of all the things I expect to be ripped to shreds for on Property 118 it isnt my knowledge of British County Regiments 1870 - 1910 haha. Did you know I have actually held a Martini-Henry rifle that was used at Rourke's Drift? How cool is that.

Couldnt see the thing on Property Hawk but I am surprised that people would criticise Lewisham we mus be the most efficient and professional outfit in the whole of South East London

18:11 PM, 20th January 2012
About 9 years ago

Definitely cool. they take great big cartridges a sample of which I saw when we attended a flooding at Purdey's;  no not the New Avenger, the gun shop in London!
Wouldn't fancy being hit by one of those!
The item is definitely there on propertyhawk
Type in the search box
LHA -Train Crash on the website

19:24 PM, 20th January 2012
About 9 years ago

You would think with the BOE helping out landlords with low interest rates then at least in return they can lower rents for tenants.  All this above inflation rent increases stinks of greed.  Landlords who keep uping rents deserve to be burnt.

21:12 PM, 21st January 2012
About 9 years ago

You seem not to realise that most landlords are not in a good position if they bought post 2005.
Most have negative equity and the only reason they are surviving and you have somewhere to rent is low interest rates.
When I bought  nearly at the top of the market in 2007 I was subsidising the mortgage by £150 per month as the rents wern't suficient.
I have still not recovered my losses from that time to now even though I am ostensibly making a 'profit'

Roy B

10:24 AM, 24th January 2012
About 9 years ago

Your mortgage payment depends on which rate the lender is following - one of mine is BoE base rate but another is 3 month LIBOR which keeps going up!!! Now nearly 70% more than the other!!


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