Cases directly relating to Local Housing Allowance tenants increased by 16%. It was also the year they collected on their largest rent arrears case amounting to £92,000.
In 2009, 60% of new instructions came from lettings agents whereas, in 2010, this number fell to 45%, suggesting that landlords are increasingly managing their own properties. Although landlords may feel that they are saving money, this can have its drawbacks, explains founder Paul Shamplina.
He said:
“Self-managing landlords often try to cut corners in the hope of saving money by not referencing potential tenants properly or not ensuring that they have adequate landlord insurance. This can cost them more money in the long-term.
"However, if a landlord does run into trouble, our data shows that there has been a significant reduction in time between landlords making an initial enquiry to actually giving formal instructions, demonstrating that they are no longer prepared to sit back and are taking quicker action to recoup outstanding monies.
"We have evidence of landlords having to use their credit card to make mortgage payments due to the failure of their tenant to pay the rent, or having to arrange for a third party to take rent payments from their tenant via a credit card, a practice which has recently been bought to the forefront by the housing charity Shelter, which reported one million households have used a credit card to pay their mortgage or rent.”
Since the government announced the proposed caps to Local Housing Allowances, Landlord Action has received a growing number of calls from landlords seeking guidance on this sector where calls for advice have increased by 35% - this is particularly prevalent in London and the South East.
Landlord Action foresee that landlords who are currently accepting a rent above the new levels are likely to face difficulty. Going forward, Landlord Action expects a similar picture to that of 2010.
Paul comments:
“In the short term, landlords facing repossession action due to mortgage arrears caused by non-payment of rent by tenants is likely to continue. We expect interest rates to remain low but advise landlords to be cautious, especially if they have high gearing on their property portfolios.
"Rent levels had already begun to increase in the latter part of 2010 and we expect this trend continue into 2011, which will give landlords some cheer. However, although this is likely to attract more investors into the market, historically low lending levels will place a large barrier to entry for many, thus, we expect house prices to be stagnant.”
