When letting to a new tenant, there is naturally a great deal of emphasis on checking the tenant’s work status and income to ensure they can afford the monthly rental payment.
However, new research suggests that many tenants have no financial resources, should they lose their jobs, or be unable to work through such issues as accident, illness, or suffering a personal crisis.
A poll of tenants by Scottish Widows found 30% of private renters admitted they would not be financially secure if their household lost its main income, but just 16% had life cover in place and only 3% had critical illness protection.
Another 35% conceded that if they or their partner were unable to work for six months or longer due to ill health or personal injury, they’d be unable to live on a single income.
Arranging financial protection was way down the list of renters’ priorities, with 80% viewing a mobile phone as essential, yet only 28% think the same about providing security for their dependants in case they die, and just 21% think that providing security for their family should they become seriously ill is a necessity.
These insights, combined with new data from Lloyds Bank, that the ratio between average city house prices and average gross local earnings is at its worst level since 2008, means that a lot of tenants – particularly those renting in city centres – might be just about managing to pay their rent each month.
The data from Lloyds revealed that over the past five years, the average UK city house price has risen by 32% from £169,966 in 2012 to its highest ever level of £224,926 in 2017.
In comparison, average city annual earnings over the same period have risen by only seven percent to £32,796.
As a result, average affordability in the nation’s cities has worsened with house prices rising as a multiple of average annual earnings from 5.5 in 2012 to 6.9 in 2017.
Affordability in UK cities is, on average, now at its worst level since 2008 when the ratio of average house price to earnings stood at 7.2.
There is a significant North/South divide as well, with the South having far worse affordability than Northern regions.
This data is important from a landlord perspective, because it shows how easily tenants can go into rent arrears should life throw them a curve-ball. If they are already struggling with affordability and have little financial back-up, then their ability to pay the rent could be very vulnerable to failure.
These are just two of a myriad of reasons why our Guaranteed Rent service has remained popular with landlords over the last 20 plus years.
It completely removes all the worry of the rent not being paid and gives landlords complete peace of mind in this regards.
Our Guaranteed Rent service does what it says on the tin. Simple things usually work the best, and our service is so easy to understand, it can be explained in less than 90 seconds:
So, if you are concerned about tenants’ ability to pay the rent, now or in the future, then consider our market-leading Guaranteed Rent service for complete landlord peace of mind!
Find out more about the different levels of service we offer >>> here.
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