The number of tenants in the private rented sector (PRS) in the UK who are deemed to be in serious arrears – because they owe two or more months of rent – declined sharply to its lowest level in two years in the three months to the end of September.
According to the latest Tenant Arrears Tracker report, published by LSL Property Services, there was a 25 per cent decline in the total number of people in serious rent arrears between the second and third quarter of 2013.
The figure fell from 92,000 in the second quarter of the year to 69,000 in Q3, which is 34 per cent lower than the total in the same period in 2012.
David Brown, commercial director at LSL Property Services, suggested that the fall may be attributable to the fact that inflation is slowing and investment in the PRS is improving.
“That’s helping to keep supply growing of homes to let. And in turn, better supply is the only real way to keep rental inflation under control,” he said.
“Over the last quarter, rents have consistently risen more slowly than shop prices and wages and rents are now growing at a similar annual rate. Recently, that seems to have really helped tenants under financial pressure.”
However, it is not just economic factors that lead to arrears and there are a number of things landlords and lettings agents can do to help minimise the risk of a tenant being unable to pay.
Always screen potential tenants effectively
If you’ve got a property that is sitting empty and does not have a renter, it is obviously not bringing in any money and it can be tempting for landlords and letting agents to rush to fill the void.
However, this could result in a much worse situation – particularly if the tenant is unable to meet their rental obligations. With demand for rental properties so high at the moment, it is important to ensure you are selecting the right person, rather than just the first potential renter that comes along.
Make sure you conduct a credit check
It can be tempting to skip the credit check, especially if the property has been sitting empty for a period of time and you want to generate some income as soon as possible.
However, they are relatively inexpensive and can be conducted quickly and easily. These probes will make sure the tenant has the ability to pay and will highlight any issues they have had in the past – perfect for bringing problem tenants to your attention before it’s too late.
Seek references
Another important aspect of tenant screening is obtaining thorough references. This is vital because it gives you a more rounded idea of the tenant’s personality and behaviour, rather than just their financial situation.
However, do not let the process drag on for too long – it can take a significant amount of time to secure detailed references and you may find you end up losing an excellent tenant because of the delay.
At Applegate Lettings we take every precaution to ensure that these guidelines are met to minimise the risk of rental arrears for our landlords.
Image: Camilla/Shutterstock
Source: www.rman.co.uk
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