A number of industry commentators are suggesting that rental arrears will be the biggest challenge facing landlords in 2017.
Currently, one index claims that 62% of UK landlords are dealing with tenant arrears and with rents predicted to rise faster than house prices over the next five years to offset tax increases from April 2017, this situation is likely to worsen.
Rental arrears are an evergreen problem for landlords. Almost 10% of all tenants in the UK fell behind with their rent payments in August 2016, according to another Buy To Let Index. This forced over 34,000 landlords to issue possession claims between July to September 2016, Ministry of Justice figures confirmed.
With a reduction in courts and bailiffs involved in possession claims, landlords are having to wait many months to regain possession of their property, all the time paying their mortgage (if they have one), while not being in receipt of any rent. The eviction process is taking 6 to 8 months in some areas.
With rents continuing to rise, and landlords increasing rents to cover increasing costs, more tenants may struggle to meet their monthly rental payment.
A new report from HomeLet has shown that during October average rents in the UK rose by 3% – a clear sign that landlords appear to be balancing affordability with returns. A tenant signing up for a new tenancy during October agreed to pay an average monthly rent of £902, 3% above October 2015’s average of £875.
Martin Totty, HomeLet’s Chief Executive Officer, said:
“We know wage growth has lagged rental price inflation and it could be that we are approaching an “affordability ceiling” whereby landlords can’t attract tenants able to afford higher rents”.
The problem is likely to particularly acute in the first quarter of 2017, as, like all of us, tenants struggle to balance household budgets following a heightened spend at Christmas. January and February are typically key months for tenants to go into arrears and landlords should be mindful of this, taking such measures as to text tenants to politely remind them of the date the rent is due.
Here at Northwood, there is one category of landlord who will be enjoying the festive season without worrying about rental arrears, and that is our 13,000+ landlords who take advantage of our market-leading Guaranteed Rent service.
Northwood’s Guaranteed Rent service was founded 20 years ago, and remains popular with landlords to this day. We even have a third party independent testimonial from a landlord who has used the service for 14 years!
Our Guaranteed Rent service does what it says on the tin! We guarantee the rent, whether the tenant pays on time or not, and even if the property is void. It is the ultimate “let and forget” solution!
Guaranteed Rent is popular with landlords in the following situations:
1. The landlord has a busy career and/or family life and does not have time to deal with tenant issues.
2. The landlord has a very low risk threshold and would prefer us to take the risk of the tenant not paying the rent.
3. The landlord lives remotely from the property, our Guaranteed Rent service being particularly popular with ex-pat/overseas landlords.
4. The landlord has limited financial means to cover their mortgage in the event of an extended void period.
5. The landlord has inherited a property or become an “accidental” landlord and does not wish to become “actively” involved in the rental processes.
So, if you are concerned about rental arrears now or in the future, consider our Guaranteed Rent service for complete landlord peace of mind!
Find out more about the different levels of service we offer >>> here.
Northwood is one of the largest and most recognised estate agents in the U.K. and the leading supplier of Guaranteed Rent to give landlords complete peace of mind.
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