Many Tenants Struggling To Pay Rent On Time
The UK rental market has seen a drastic increase in the number of people renting
as people are pushed out of the property buying market due to mortgage lenders demanding large deposits, more stringent borrowing conditions and with more people losing their jobs and worrying about the economic crisis.This has led to an increase in rents but it now appears that these inflated rents are putting too much pressure on tenants and many cannot afford the rent or struggle to pay the rent on time. Just over 40% of landlords that are members of the Association of Letting Agents report that their tenants are not paying the rent on time from the period of October 2011 to March 2012. The main reason is unemployment and with more and more people losing their jobs, this figure is likely to rise.
Many tenants are trying to re-negotiate their rent with their landlord and get a rent reduction and haggling on rents has become common place in the North East of England and the South West of the country.
More and more tenants are finding themselves out of a job and unable to meet their rent. The knock-on effect is that with rents not coming in on time or not coming in at all, many landlords are unable to make their mortgage repayments. Coupled with rising mortgage rates this will lead to landlords defaulting on their mortgage payments, losing their properties and in turn tenants being forced to move out in any case.
This highlights just how important it is for both tenants and landlords to research the situation carefully and ensure they can afford the rent if they are the tenant and the mortgage repayments if they are the landlord and have a backup plan in place in case of being made redundant or not receiving the rent on time.
Nowadays not only are landlords asking for references for tenants but 10% of tenants are requesting references and background checks on landlords. The Association of Letting Agents advises anyone looking to rent a property or let a property out to consult a professional licenced letting agent to check the possible search and financial checks that can be done.
The situation varies around the UK and the higher rental returns is drawing some buy to let and investor landlords back to the struggling property market. Its hoped that a small increase in available letting property will stablise ever increasing rents. However a recent report shows that as it continues to be incredibly difficult to get on the property ladder in the UK, more and more people are turning to renting and this means that there is a massive shortage of letting properties. Its estimated that around 200 billion pounds needs to be invested in the rental market in the UK to ensure there is enough supply to meet demand. In the UK there are very few funds investing in rental property, where as in the USA around 40% of rental property is owned by financial institutions.
Many landlords are opting to save costs by managing their own properties and only opting to have a letting agent collect the actual rent, rather than a fully managed service.
While letting agents are getting more and more enquiries from people looking at renting a home, only around 80% of these applicants become prospective tenants after all checks have been carried out been there is a growing concern regarding suitable tenants with many tenants having poor credit ratings and lack of funding for rents. There also seems to be a growing number of tenants in receipt of housing benefit but using this money for other things and not paying rent, thus meaning they are in arrears with rent and leading to more property repossessions from landlords that cannot afford mortgage repayments.
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