New research has found that private tenants are finding it more difficult to pay the rent on time, making it even more important for landlords to protect their rental income.
In February, the amount of late rent accounted for 8.8% of all rent due, up from 8.2% in January, according to the latest Buy-to-Let Index from Your Move and Reeds Rains.
Worryingly, tenant finances have also worsened annually. February’s rent arrears rate of 8.8% is up significantly from 7.6% in February 2015.
On a longer-term basis, however, the rent arrears rate is more encouraging. In comparison to an all-time high of 14.6% in February 2010, this year’s figure is down considerably.
Despite this improvement, a monthly increase in rent arrears indicates that landlords must protect their rental income against further rises. Rent Guarantee Insurance is the most effective way for you to ensure you still get paid, even if the tenant defaults on the rent.
The Director of Your Move and Reeds Rains, Adrian Gill, comments on the findings: “For half a decade, we have tracked a reliable long-term improvement in total levels of late rent. That is levelling off now.
“It may be that we have reached a point where a residual possibility of communication, organisation and practical issues mean some late rent is inevitable. Despite this possibility, a real optimist would hope that late rent could continue to improve towards zero.
“In fact, our latest figures on the most serious rental arrears are more encouraging, which would support the idea that we aren’t anywhere near more fundamental limits to the improvement. Better communication between landlords and tenants, and quality property management will be key in helping the market push this risk even lower.”
He adds: “The only cloud on that horizon is that more serious affordability issues are marginally more likely after the latest restrictions on buy-to-let investment. I am an optimist, but the entire buy-to-let industry is becoming more complicated, and will require more nuanced and bespoke answers for landlords in different situations.”1
Troublingly, it is thought that even the private rental sector may become too expensive for many in the future. It is therefore important that you guarantee your rental income and avoid rent arrears.
Our guide will help you protect your buy-to-let business from rent arrears: https://www.justlandlords.co.uk/news/protecting-your-lettings-business-from-rent-arrears/
Positively, Your Move and Reeds Rains have also announced that gross annual rental yields have now hit a 17-month high.