The issue of rent arrears has always been a worrying one for landlords and letting agents, but now it has been highlighted that they may be about to increase.
RentalStep, the PropTech startup, is warning landlords to be wary, as rising rents and the current stagnation of wage growth may result in a confrontational result. If tenants find it increasingly more difficult to keep up with monthly payments, this could become an issue for landlords.
Data from estate and lettings agency Your Move has revealed that a number of tenants in arrears have increased for four consecutive months between January and April this year. Specifically, this is a rise from 8.4% to 9.4%.
Information regarding rent arrears has also come from estate and lettings agency Belvoir. The agency has reported that a fifth of its offices experienced rent arrears from as few as four and as many as ten tenants during the first three months of this year.
It has been estimated that collectively landlords are losing roughly around £900m each year from rent arrears. This could possibly be about to rise, with tougher conditions and increasing regulations taking their toll on landlords and agents. If buy-to-let investors feel the need to increase rents, then it may come back to bite them.
Mike Georgeson, founder and chief executive of RentalStep, said: “Rent arrears are a real and serious issue for the nation’s landlords and they need to do everything in their power to protect themselves from being seriously affected.”
“Many industry commentators predict that rents could rise as a result of the incoming ban on tenant fees. Landlords need to be aware of how this could impact on rent arrears and prepare accordingly.”
Carrying out comprehensive checks on potential tenants can therefore be crucial for landlords.
Georgeson continued: “Making sure you let to tenants who have been fully referenced and credit checked is absolutely vital.
“Of course, you’ll never be able to completely avoid rent arrears as any change in circumstance could cause a tenant to miss a payment, but you must do everything you can to make sure you partner up with reliable renters.”
Now, more than ever, it may be worth considering Rent Guarantee Insurance for peace of mind.