It will come as no surprise to many residential landlords that a recent survey carried out by the National Landlords Association (NLA) found that over half of landlords who responded to the survey said they had experienced rent arrears problems in the last 12 months. Unfortunately it is a hazard of the business and just one reason why a commercial property insurance quote should always include a price for rental guarantee.
Average debt equivalent to one month’s rent
According to the NLA, the average debt that landlords incurred from late paying tenants was £730, which is roughly equal to the monthly rent landlords in the UK are generating at the present time. What the survey did highlight though was the fact that landlords themselves often have mortgages on their own homes to pay, and how seriously late rental payments can affect them. Of course landlords with several properties in their portfolio can soon find their business in trouble if more than one tenant starts defaulting on payments.
Business management more time consuming
The survey also revealed that the majority of landlords questioned thought the day to day running of a lettings business was becoming more difficult. This at a time when the sector is experiencing one of its biggest boom periods for many years. A comment perhaps on the ever expanding rules and regulations landlords have to meet to lawfully conduct their business. The recent changes in the way Houses of Multiple Occupation (HMO) are governed and the many local authority schemes which now require landlord registration have added to the paperwork already required for compliance with heating, electrical and health and safety issues.
Housing benefit changes won’t help landlords
The recent changes in Local Housing Allowance as well as other factors in the Welfare Reform bill, suggests it will be even more important for landlords to get good property insurance. The sector is expecting rental arrears to mushroom, certainly in the short term as tenants come to terms with a cut in income.
Support available for landlords who look
Organisations such as the NLA offer support and expert advice to landlords at all times, something that is absolutely essential when problems arise. Landlords new to the business will find that the NLA or organisations similar to them operate in most areas of the UK and membership will open their eyes to the many pitfalls that surround the business before they actually fall in them.