Landlords have seen a rise in tenants falling into rent arrears in the last few years, after the cost of living has grown and wages have remained the same.
Some landlords use rent guarantee insurance to ensure that their investments remain secure, however, others will have to evict tenants who regularly miss rent payments.
Rent Guarantee Insurance Ensures Investments Remain Secure
Daniel Dovar, co-author of Residential Possession Proceedings, says: “Rising rents on residential property and falling real wages are trends that have been in place for a number of years, and have stretched the finances of an increasing number of tenants to breaking point.
“Low vacancy rates for rental properties, especially in London and the South East, mean that landlords are also more willing to remove tenants who have a history of defaulting on their rent from their property.
“With demand for rental property in many local markets outweighing sully and forcing rents upward, the opportunity cost to a landlord of having a property occupied by someone that can’t or won’t pay their rent has increased. That makes emptying a loss-making property quickly a bigger priority. Landlords are also under a lot of pressure to meet their mortgage payments on buy-to-let investments.
“If the availability of mortgages to first time buyers continues to improve and the pipeline of new build property recovers, we might see the momentum behind rental price growth ease. That could go some way to relieving the financial stress some tenants are encountering.”1
As Dovar states, there are indications that the housing market will recover, and if this continues, the pressure on the private rental sector will decline, which will allow landlords to be more tolerant of their tenants.
However, with areas such as London being predominantly rented, landlords with homes in these places will have to remain attentive when it comes to missed rents.
Until there is a decrease in demand in this sector, an increase in wages, and more affordable private rental accommodation, landlords will have to explain the consequences of not paying rent at all, or on time, to their tenants, before signing an agreement.