Posts with tag: tenants in rent arrears

Dealing with Rent Arrears

Published On: January 13, 2015 at 4:51 pm

Tags: avoiding rent arrears,tenants in rent arrears

Tenants that do not pay their rent can cause huge problems for landlords. If a landlord relies on rental income to cover mortgage repayments, maintenance, or as a monthly supplement, loss of rent can leave landlords in a difficult position.

Landlords with large portfolios, who experience rent arrears in just one house, can quickly abolish margins and affect profitability and sustainability.

Late rent payment is a huge risk that landlords face, as 32% have experienced arrears in the past year, revealed the National Landlords Association (NLA).¹

Dealing with Rent Arrears

The average rent owed is more than £1,600¹. If this amount has not been factored into the landlord’s budget, it can leave a wide gap in finances.

Landlords can be proactive however, and avoid a serious problem. The following tips will minimise the risk, and aid you if rent arrears do become an issue. The beginning of the tenancy should be the moment you reduce any possibilities.

It is crucial to vet would-be tenants, including background checks, financial checks, and references.

It is important to note that despite positive findings at this stage, anyone can experience a change in circumstances, so there are ongoing steps to take throughout the tenancy:

Build a good relationship

Maintaining a strong landlord-tenant relationship can ensure that any warning signs are picked up on. If the tenant has a relaxed rapport with you, they will be more likely to speak with you about any difficulties they are having.

Monitor payment

The tenancy agreement should detail when and how payment should be made.

If you discover that rent has not been paid, it is important to enquire quickly and politely. By finding out straight away, the problem can be sorted sooner.

If the issue is worse than immediately assumed, you should arrange a meeting or phone call with the tenant to discuss the situation. Always keep record of communications.

There are many reasons a tenant could be in arrears, including relationship breakdowns, or employment issues. Landlords should remain professional and sensitive throughout any intervention.

The NLA has advised that a repayment plan can be a positive option, depending on the reasons for arrears. A negotiated method can ensure the tenancy continues, and maintain a good relationship. A temporary adjustment to rent may be agreed, but should be recorded in writing and signed by both parties.

Landlord’s budget

Landlords are recommended to plan for only receiving ten out of 12 months’ rent in their budget. This makes sure that you are prepared for a possibility of arrears, and the impact on your finances will not be as bad should it occur.

It is advised that you and your tenant(s) look to the Citizens Advice Bureau, The Money Advice Service, and Step Change.

The tenant may want to end the tenancy, and if both parties agree it can end liability for rent, and allow you to find new tenants. Often, the tenant will leave when new tenants are found.

¹http://www.landlords.org.uk/news-campaigns/news/are-you-suffering-rent-arrears

Thousands of Tenants can’t Pay Rent

Published On: May 31, 2012 at 12:12 pm

Author: Em Morley

Categories: Property News

Tags: high rents tenants in debt,tenants in rent arrears

A leading debt counselling charity has warned that thousands of tenants are being put in debt by spiralling rents.

Consumer Credit Counselling Services (CCCS) stated that in excess of 10,000 people contacted them for assistance with rent arrears during the last year. This was an increase of 27% on the last 12 months.[1] In total, 10, 246 people contact CCCS for assistance in 2011, in comparison to 8,074 in 2010.[2]

Last year’s figures suggest that on average, renters asking for assistance were £760 behind on their rent and around £82 behind on money needed to cover their monthly living expenses.[1]

Thousands of Tenants can’t Pay Rent

Worst position

The research shows that private tenants are seemingly in the worst position. On average, they are £924 in rent arrears and have a monthly budget deficit of £145.[2] Those tenants in debt to housing associations were roughly £705 behind on payments, with those in arrears to local authorities owing £622 on average.[2]

Of all tenants that contacted the charity for help with their rent arrears, their rent had increased by an average of 2.4%.[1]

Growing concern

CCCS Director of External Affairs David Corinaldi, was very concerned by the findings. He said: “A very large number of people are struggling to keep up with their rent payments, and with rents near record highs, the problem is getting worse, not better.”

In addition, Corinaldi warned that with “household finances being squeezed as it is,” another “rent hike” will be “the straw that breaks the camel’s back.”[1]

Corinaldi’s concerns were echoed by Kay Boycott, Director of Communications, Policy and Campaigns at charity organisation Shelter. Boycott said that the figures “paint a worrying picture of the rising numbers of families who face a monthly battle to keep a roof over their head.”[2]

She went on to suggest: “Just one thing like an unexpected bill can be enough to tip people over the edge,” and ultimately “put their home at risk.”[2] Boycott also called for those concerned over rising rent to seek assistance, saying: “Getting advice early can help to stop things from spiraling out of control.”[2]

[1] http://old.lettingagenttoday.co.uk/news_features/Thousands-of-tenants-cant-pay-rent-says-debt-charity

[2] http://www.stepchange.org/portals/0/Documents/media/pressreleases/Press_release_High_rents_forcing_thousands_into_debt.pdf

Tenants Increasingly in Rent Arrears

Published On: January 6, 2012 at 3:11 pm

Author: Em Morley

Categories: Landlord News

Tags: tenants financial difficulty,tenants in rent arrears

Figures from a survey conducted by Templeton LPA have made for unwelcome reading for Britain’s landlords.

Tenant Arrears Tracker

Templeton LPA’s latest Tenant Arrears Tracker has indicated that the number of tenants facing extreme financial difficulty rose significantly in the last quarter of 2011. Almost 11,400 more tenants are in arrears of two months or more in comparison to the same period in 2010.[1]

Despite a seemingly low 9.3% of all rent being late or unpaid during November, the number of tenants owing two or more months rent is rising rapidly. This said, the number of tenants in severe rent arrears makes up only 2.4% of all private rented properties across England and Wales.

Two speed market

“The soaring cost of renting has created a two speed market,” remarks Paul Jardine, Director of Templeton LPA.

Jardine also suggests: “The overall tenant population has coped relatively well with rising rents and soaring living costs,” and it just the minority of renters “falling deeper and deeper into payment difficulties.” He does however, acknowledge that “the number of severe arrears cases is rising.”[1]

Jardine also remarks: “While the wider tenant mix has changed since the mortgage market downturn with a greater number of financially sound yet frustrated first time buyers, a growing number of tenants are seeing their job prospects affected by the UK’s economic malaise.”[1]

Evictions

Additional figures taken from the Tenant Arrears Tracker show that a greater number of tenants are being evicted from rental properties. During the final quarter of 2011, 24,966 tenants were served eviction notices, an increase of 11% on the previous year. Worryingly, evictions were up 5.4% in quarter three of 2011 in comparison to quarter two.[1]

Tenants Increasingly in Rent Arrears

More pleasingly, buy-to-let mortgages more than three months in arrears fell by 7% in the final quarter of last year, in comparison to the previous quarter. This showed a yearly decline of 17%.[1]

Jardine feels: “The growing level of severe tenant arrears has yet to filter through into mortgage payment problems for landlords.”

He observes that while mortgage rates remain low, “there has also been a change in landlords’ behaviour.” Jardine now feels that “rental income has become the most important component in an investor’s annual return.”[1]

He goes on to state: “As a result, many landlords are being less lenient with tenants facing initial payment problems, and are looking to use court orders to replace tenants quickly in expectation of finding a financially sound substitute and potentially an increased rent, given the strength of competition for rental property in many areas of the UK.”

Jardine also feels: “A growing number of landlords are exploiting higher rents to set aside slush funds for future arrears and void periods, or signing up to rental indemnity schemes.”[1]

Gloomy outlook

Looking to the forthcoming year, Jardine provides a stern and gloomy forecast. He anticipates: “Given the economic challenges the UK faces and the worsening labour market, we anticipate that both overall arrears and severe arrears will rise in 2012 and this will feed into increased tenant evictions and hamper a growing number of landlords’ ability to meet their monthly mortgage costs.”[1]

[1] http://www.landlordexpert.co.uk/2012/01/06/uk-tenants-in-financial-difficulty-is-increasing-rent-arrears-for-uk-landlords/