Landlords Face Problems Through Rent Arrears
Renting a property in the UK is becoming more popular at the moment, due to the lack of affordability of a home owner loan or mortgage for many would be buyers and the low loan to value loans offered by banks and building societies.
Although renting is seen as a cheaper option for many individuals, the current climate of the UK economy is still placing a financial strain on many tenants and many are struggling to pay their rent, due to lack of income, or other commitments such as large unsecured loan and credit card repayments.
As tenants build up unsecured loan arrears, paying the rent becomes less of a priority and a growing number of landlords are experiencing an increasing level of rent arrears from their tenants falling behind in rental payments.
This is having a knock on effect on many landlords, the majority of whom have a buy to let loan secured on their property and depend on receiving the rent every month in order to meet their own loan repayments.
Although landlords have the right to evict tenants who fall behind with their rent, this can cost a lot of money and then there is the problem of finding a new tenant to fill the void and as a result of this many landlords are falling into arrears on their buy to let loans, which can give them a bad credit rating and stop them developing their portfolios through additional loans and property purchases.
New figures from the National Landlords Association (NLA) have found that tenant arrears account for almost half of landlord repossessions.
David Salisbury of the NLA said “Many landlords have mortgages to pay on top of the expense of gaining possession. One third of landlords have reported paying between £250 and £1000 to have tenants removed. This amount is often compounded by late rent payments.”
