As a landlord one of your biggest and most common worries will be whether one of your tenants falls into rent arrears. Even if you have protected your business with rent guarantee insurance, having a tenant fail to pay their rent can cause all sorts of issues and may even require you to start the eviction process. This is why landlords will be happy to hear that recent reports are suggesting that tenants are now becoming more financially secure.
According to the property specialist LSL Property Services, even though rent prices in October increased to an average of £770 – the highest they’ve ever been – they have also seen signs suggesting that renters are more financially secure than ever. David Newnes, director of Your Move and Reeds Rains which are part of the LSL Property Services group, said: “Tenants have battled a broadly stagnant jobs market for years. Recent progress on the unemployment rate has helped bring down the most serious cases of rent arrears.
“But for others consistently falling just a little behind on rent, the trouble is more with incomes that just haven’t kept pace with the cost of living. Looking ahead, if more homes to rent can coincide with a true renewal of real wages, this could provide a powerful combination and would take rent arrears even lower. As price rises steady a little, landlords can rely on newly stable rental yields. Stable yields aren’t only good news for landlords.
“Letting a property now involves even less risk of not getting the rent on time and tenant arrears could reach a new record low in the coming months. That should boost demand from tenants and investment from landlords. Good news on the affordability of renting is good news for the whole country.” However, there are those that do not agree with LSL’s findings, such as Housing Minister Brandon Lewis, who said: “The LSL figures are an inaccurate reflection of the private rented sector, their methodology exaggerates rent increases by only looking at new contracts.
“This Government is delivering the homes this country needs, including homes for the private rented sector. There are now 700,000 more homes in England than there were in 2009, housebuilding is up 16% compared to last year.” Meanwhile, Campbell Robb, chief executive of charity Shelter, claimed that many renters are still struggling and added: “Our advisers are hearing from families every day who are struggling to pay the rent.
“So while most of us are thinking about what presents to put under the tree this Christmas, we know that some parents will be wondering whether their children will have a home at all. The only way to end this madness is for politicians to commit to building the genuinely affordable homes we desperately need.”
There seems to be an ongoing argument between political parties and industry experts about whether the cost of living is starting to decrease, an argument which the Labour and Conservative parties will continue to discuss in the run up to the General Election. The Joseph Rowntree Foundation is just one group who claim that the cost of living is still leading to issues in the private rental sector and recently published figures claiming that the amount of private renters in poverty is now the same amount as those in the social housing sector.
However, a government spokesperson dismissed these claims and said: “The government’s long-term economic plan is working to deliver the fastest growing economy in the G7, putting more people into work than ever before, and reducing the deficit by more than a third. The only sustainable way to raise living standards is to keep working through the plan that is building a resilient economy and has enabled us to announce the first real terms increase in the minimum wage since the great recession.”
With so many conflicting reports its difficult for landlords to decipher whether their tenants are any better off than they used to be. Furthermore, they are unable to predict what will happen in the private rental sector over the next few years, however one thing is for certain: it’s going to experience a considerable amount of ups and downs.
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