Landlords: Prepare for the Government cutbacks and take preventative measures!
Over 800,000 jobs were lost during the recession, and with another 490,000 public sector job losses announced as part of the Government Spending Review many tenants could come under increasing financial pressure over the coming months.
For landlords the ramifications are potentially serious should a tenant lose their job. Rising unemployment levels could lead to an increase in arrears and void payments as tenants are unable to afford the rent. This puts increasing pressure on landlords to sustain their own mortgage commitments.
BUT by taking precautionary measures landlords can minimise the risk of a tenant defaulting.
Landlords need to make sure they obtain satisfactory references for tenants at the start of the tenancy agreement to establish whether the prospective tenant can afford the rental payments. They should also ask for guarantors, namely family and friends, to cover the cost of missed rent should the tenant default on payment.
Nearly all references include an employment reference nowadays, providing landlords with a great indication of a tenant’s employment history and current situation. However, when gaining a reference check landlords need to pay particular attention to the type of work. Only a few years ago the ideal tenant would be one working in the financial industry, but that is not the case anymore.
This is precisely the kind of service offered by PAD4U to all of our landlords! Every tenant we find and place in your properties undergoes stringent referencing procedures including both employment and current / previous landlord references in addition to a statutory credit check, thus providing our landlords with the most comprehensive overview of any prospective new tenant.
But unfortunately even the most in-depth reference checks cannot prevent a tenant from becoming unemployed.
With many more cuts expected in both the public and private sectors, many tenants may find themselves in financial difficulty over the coming months. This level of uncertainty is worrying for landlords and may encourage more to renew their interest in rent guarantee insurance. For a moderate premium, and subject to satisfactory referencing, you can safeguard yourself and your rental income against any payment difficulties your tenant may incur. PAD4U are able to offer this service in conjunction with Endsleigh Tenant Referencing and more information can be obtained upon request. Please contact our office on 01612572441 to discuss the options and possibilities with one of our highly trained staff.
It is widely acknowledged that landlords at particular risk are those themselves on a moderate income and whose tenants receive some assistance from the state.
Not only could these people lose their jobs but they may also see some of their state assistance withdrawn as part of the impending changes to the welfare system. Social landlords need to prepare for the changes to housing benefit and assess how it will impact their income and business.