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Landlords across the country appear to be changing tack as the amount of successful possession orders appears to be on the rise.
Let Insurance Services have found the amount of possession orders without a money judgement is up a third on 2010 as landlords appear to be cutting their losses.
“Landlords and agents are facing mounting rent arrears and with no alternative, but to seek a quick resolution in the courts. Tenants have become more savvy with rental law and much more conversant with the legal detail. This trend, combined with the fact that many tenants have fallen on bad times and have no financial resources to clear arrears debt has led many agents and landlords to pursue possession only, foregoing any attempts to secure rent arrears through the courts. Landlords and agents often face better odds securing new tenant rental income than they do securing rent arrears from an existing tenant.” said Michael Portman, Managing Director of Let Insurance Services.
They also expect rent arrears to continue to increase and they themselves have seen a rise in rental arrears notifications, plus a 24% increase in rent guarantee insurance taken out by landlords in the first nine months of this year.
Michael Portman explained why, “We have seen a sharp rise in demand for rent guarantee insurance as landlords and agents look to find ways to protect their rental income. It is clear that this problem is not going to go away. The labour market is starting to feel the strain of public sector job losses and the economy is far from healthy. Ever increasing fuel and food prices could place more tenants in difficulty and the labour market has much ground to make up as the private sector struggles to compensate for public service job losses.
“Against this backdrop, as rents rise over the medium-term, a growing number of tenants will see their finances come under mounting pressure – and we expect tenant arrears cases to climb over the next 12 months.
“The message to landlords and agents is make sure that they consider the strength of the tenant when letting the property by taking out full references and to consider specific insurance through a specialist company for loss of rent if the tenant defaults and the cost of legal expenses to obtain possession.”
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