Financial Pressures for Landlords

The current economic crisis is having an adverse impact on both landlords and tenants. Rising levels of unemployment and the increasing number of people facing redundancy means that many tenants are having difficulty in paying their rent. The knock on effect is that landlords may then struggle to pay the mortgage. A tenant in arrears could lead to potential repossession of a landlord's buy-to-let property which in turn could mean possible tenant eviction. Three-quarters of landlords have reported being affected by tenants who are unable to pay their rent.

What can you do to minimise the risk?

Before the tenancy begins

Take up a reference from a potential tenant's employer.
Perform a credit check on the would-be tenant.
Take out appropriate Landlord Insurance cover:
- Rent guarantee insurance (loss of rent cover).
- Legal expenses insurance.

During the tenancy

Be alert to early warning signs such as late payment of rent, a request for a rental holiday or a request to change the rental terms.
Be aware of a tenant's silence as this may indicate a problem.
Keep channels of communication open and consider negotiating if your tenant is facing financial problems.

What can you do if faced with financial difficulties?

Contact your mortgage provider before you default and request a payment break or seek to renegotiate the payment terms.
Obtain independent financial and legal advice.
Consider seeking debt counselling:
- National Debtline: www.nationaldebtline.co.uk
- Consumer Credit Counselling Service: www.cccs.co.uk
- Citizens Advice: www.citizensadvice.org.uk

Financial security is essential for landlords so ensure that you take steps to minimise your exposure to, and the impact of, defaulting tenants and vacant properties. Additionally, arm yourself with information as to what you can do if you find yourself in financial difficulty.

Attracting and keeping tenants

Legal tips for landlords

Dealing with problem tenants

General landlord information (DIY, Inventories and more..)

Energy-saving tips for landlords and tenants

Financial tips for landlords

Buying a buy-to-let property (auctions, location etc)

Insurance for landlords

Using letting agents

Mortgage information for landlords

The information contained within this article is for general information purposes only, it does not constitute advice. Direct Line for Business endeavours to keep the information up to date and correct but does not make any representation or warranties of any kind about its completeness, accuracy, reliability or suitability. Any reliance you place on the information is strictly at your own risk. Direct Line for Business will not be liable for any direct or indirect loss or damage arising out of or in connection with the use of this information.