Many landlords and tenants are worried about how the cost-of-living crisis and the looming recession will affect the ability to pay rent.
In a lot of cases landlords have a mortgage against their buy to let property, they will be worried about the increase to the interest rates as well as their own financial situation.
Due to a shortage of rental property, rents are rising dramatically. For example, a 3-bedroom property on the market in February 2020 would have been around £700 pcm and that same property would now be achieving £850 pcm.
While it is a positive for landlords that rents are rising, they are vulnerable if a tenant is unable to pay the rent. Tenants will struggle if they cannot meet their household costs as even if they look to downsize they are likely to be paying the same or more rent for a smaller property in the current market. Long term tenants may have been subject to annual rent increases but even if these were as much as 5% they have not kept up with market rents.
Whilst higher rent is good news for landlords, looking to cover the increase in borrowing costs, it adds to the pressures many families are facing. Landlords should be asking themselves – if the tenant does not pay the rent can I cover the mortgage repayment until the tenant catches up or the property can be re let?
A product like the Rent Guarantee Protection can help by covering any non-payment by tenants and legal costs a landlord may face.
In some cases, due to the lack of social housing, a council will not help to rehome a tenant until a landlord starts possession proceedings. This can make it difficult if the landlord is looking to move back into the property or needs to sell the home.
To enquire about the cost of rent guarantee protection email charlotte.baker@belvoir.co.uk or call 01664 569 700. We are happy to talk through any worries you may have and see how we support you.
