Rent problems threaten to put landlords in to debt

by Property118.com News Team

14:07 PM, 12th January 2011
About 8 years ago

Rent problems threaten to put landlords in to debt

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Rent problems threaten to put landlords in to debt

Many landlords are worried that they will face problems paying their buy to let mortgages as more tenants are struggling to pay their rents.

Job losses, pay cuts and tax rises are hitting hard – with 40% of letting agents reporting tenants in financial difficulties and have problems with handing over their rent in the latest rental conditions survey from the Association of Residential Letting Agents (ARLA) for the last quarter of 2010.

That’s a 10% increase on the previous quarter and the first rise for 18 months.

Landlords in London are having a slightly better time, with letting agents saying three out of 10 are reporting problems collecting rent.

Ian Potter, ARLA’s operations manager, said: “At the beginning of 2010 we predicted that the number of tenants having difficulties paying rent would increase and unfortunately, this seems to be the case today.

“It is a situation which can have serious repercussions throughout the private rental sector as, without guaranteed rent income, landlords may also have problems paying mortgages. At worst, it may result in a rise in repossessions.”

More tenants are haggling over their rents

ARLA’s research also revealed a rise in the number of tenants haggling with landlords over rents, rising from 44.5% to 47.1%, further indicating the financial pressures on tenants.

ARLA suggests landlord and letting agents should have a robust tenant selection process and should carry out checks on credit history and references to try and spot tenants who might have future financial problems.

“It’s difficult for landlords to predict whether current or prospective tenants will hit financial difficulties, our research highlights the importance for landlords or agents to implement a thorough selection process and to conduct reference checks on potential tenants – and to consider the benefits of rental protection insurance,” said Mr Potter.

The news comes hot on the heels of a disclosure from Shelter that more than 2 million people pay their mortgages and rent with a credit card – a figure that has doubled since the end of December 2009.

The Council of Mortgage Lenders, the voice of the UK’s biggest banks and building societies, scoffed at the inference borrowers were paying by credit card and claims the majority with credit problems are tenants in privately let homes.



Comments

15:18 PM, 12th January 2011
About 8 years ago

[...] This post was mentioned on Twitter by Debbie Cocker-Brown. Debbie Cocker-Brown said: RT @IamALandlord: Rent problems threaten to put landlords in to debt #TMCNCH [...]

Gary Nock

10:44 AM, 14th January 2011
About 8 years ago

Pay £63.45 every 6 months for rent insurance guarantee and sleep at night. If a tenant goes belly up and you have to evict through County Court kiss your proverbial goodbye to £5,000 in lost rent and legals.

14:56 PM, 16th January 2011
About 8 years ago

Ok, it's time for some wisdom. First and foremost credit ratings rarely if ever can actually identify a person who may have trouble paying, in fact I hope to this practice illegalized. There is no court proceeding with credit scores therefore the victim, which is the tenant, has to be tied to a score for which no evidence has been presented to a court that they owe anyone any such funds. It is an injustice when we are innocent until proven guilty any joe shmo can claim I owe him $200 for something and credit companies have no idea if this is true or not and really don't care.

That being said it isn't credit scores that are the problem, the problem is low wages, greedy government taxes, and greedy landlords. If the people of your ocuntry cannot afford your rent, your rent is too high. The best thing to do is to lower your rents and keep tenants in the properts and keep generating the income it will provide for your mortgages. It is also very arogant to suggest that a tenant be a bad person for inability to pay rent yet in the same paragraph cmake a plea for pitty that landlords might not be able to afford their propert mortgages. Interesting and one-sided. What if I treat you with the same rude discord, what if I said well perhaps landlords who can't keep tenants in their properties and can't secure payments, and can't set reasonable rent rates and keep income generated shouldn't be allowed to own property? I think that you should think of the impact a bad economy has on your mortgage and then say and to my tenants the same pitty, then lowewr your rents, because it's outrageous to "cry" and blame your tenants for your mortgage. What if I the bank treat you the same and evict you and say sorry there's no excuse for not paying? Yes I think it's time to think about the logical solutions, evictions are of no value to anyone, they bring no income and no good results, most tenants can shine when rent is reduced to a fair amount. Perhaps old attitudes need to be put in the same place the socks go when they don't come back out of the dryer, perhaps a bit of pride needs to be swallowed.

9:20 AM, 20th January 2011
About 8 years ago

Where do you get the rent insurance from ?

9:41 AM, 20th January 2011
About 8 years ago

Before you make a purchasing decision please check this out - http://www.themoneycentre.net/landlords/rent.htm

If you just want a cheap rent guarantee policy please call my collegue Neil Patterson on 01603 428560 and he will put you in touch with an independent broker.

10:03 AM, 20th January 2011
About 8 years ago

Great buying rent guarantee insurance but have finally managed to get my ex-tenants out after an eviction notice and Homelet did not honour the rent guarantee, onlt the legal cost associated with the eviciton notice. I am now out by nearly £3K plus around £1K repairs ebcause they trashed the place and lost rent while I get it up to standard again. So insurance is great when it works, won't be using Homelet again.

10:03 AM, 20th January 2011
About 8 years ago

Great buying rent guarantee insurance but have finally managed to get my ex-tenants out after an eviction notice and Homelet did not honour the rent guarantee, only the legal cost associated with the eviciton notice. I am now out by nearly £3K plus around £1K repairs because they trashed the place plus lost rent while I get it up to standard again.

So insurance is great when it works, won't be using Homelet again.

10:16 AM, 20th January 2011
About 8 years ago

Sounds like you didn't have insurance which covered 'malicious damage by tenants'. Our insurance scheme, priced at £1 per thousand of building reinstatement value, can have this cover added for your entire portfolio for just £0.11 per 1,000 + IPT.

For further details please contact Neil Patterson on 01603 428560. Neil can also put you in touch with Rent on Time if you require that level of certainty in the future or alternatively he will be pleased to introduce you to our recommended independent insurance brokers to quote you for Rent Guarantee Insurance.


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