Landlords urged to prepare for impact of Government cuts

Landlord Assist is advising landlords to consider the impact of tenants who could lose their jobs due to the Government cutbacks and to take preventative measures.

Related topics:  Specialist Lending
Millie Dyson
21st October 2010
Specialist Lending cash coins increase grow money growth
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 Graham Kinnear, Director at Landlord Assist, says that by taking precautionary measures landlords can minimise the risk of a tenant defaulting.

He says:

“Landlords need to make sure they reference 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.”

But even the most in-depth reference checks cannot stop a tenant becoming unemployed.

Kinnear adds:

“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 and legal expense insurance.”

Stephen Parry, Commercial Director at Landlord Assist, believes landlords at particular risk are those on a moderate income whose tenants receive some assistance from the state.

He says:

“Not only could these people lose their jobs but they may also see some of their state assistance withdrawn as part of the impending changes to the welfare system.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.”
More like this
Latest from Property Reporter
Latest from Protection Reporter
CLOSE
Subscribe
to our newsletter

Join a community of over 30,000 intermediaries and keep up-to-date with industry news and upcoming events via our newsletter.