Buy-to-let landlords have yet another reason to feel positive about their prospects in 2013; research shows that the number of tenants two or more months behind on their rent fell by 15.6% in the last three months of 2012. Research carried out by Templeton LPA, a firm of chartered surveyors, found that in absolute numbers those tenants in severe arrears has fallen by 16,000 in comparison to the third quarter of 2012. This has reversed the trend of the last year, which had seen rates of those renting who were in arrears increase by 10.8%.
The rising cost of living combined with further increases in monthly rental charges during most of 2012 has been blamed for the previous trend of increasing arrears. However, a fall in unemployment rates –standing at 7.8% in December – and the creation of 44,000 extra full-time jobs between August and November has helped to reduce the number of households with limited income who are unable to keep up with their rental payments. A slowdown in rental price rises during the latter months of 2012 also seems to have had a positive impact on the number of people who are now in arrears. However, an alternative explanation for the improving situation regarding rental arrears is that landlords are now more selective of the tenants that they choose to live in their properties, picking those who have previously been able to pay their rent in full and on time; obtaining references prove very helpful in this. Landlords are also more aware of their legal rights and are now more proactive in dealing with tenants who are behind with their payments, helping to reduce how many then fall into severe arrears.
Further Good News
Figures released by LandlordReferencing.co.uk, which claims to provide the most complete referencing service to landlords and letting agents, shows that in 2012 the amount claimed for rent arrears and property damages has decreased by 30% on the previous year, equivalent to £716,430. The service believes that it acts as a deterrent to tenants, as once they learn of the system – which emails members free of charge the details of problem tenants – they think twice before leaving the property in a poor condition and parting on bad terms from their landlord.
Besides making use of reference checks and the services provided by LandlordReferencing.co.uk landlords can further protect themselves by taking out rent guarantee insurance, which ensures they are not left out of pocket if their tenants fail to keep up with their payments.
By Amy Millband