Experts have tracked the growing demand for rentals in the United Kingdom (UK) as higher prices and tough credit restrictions have pushed prospective homebuyers into the rental market, and now it appears the resulting inflated rents are too much for tenants. An incredible 41.2% of members of the Association of Letting Agents (ARLA) reports tenants are not paying rent on time, and are citing high unemployment as the main culprit. Analysts at ARLA advise both tenants and landlords to research options thoroughly and consider financial viability before signing a letting contract so that future problems like this may be avoided. For more on this continue reading the following article from Property Wire.
New research from letting agents shows the UK is feeling the squeeze of the economic slowdown, as more tenants are struggling to pay their rents on time.
Four in ten, some 41.2%, of members of the Association of Letting Agents (ARLA) reported an increase in the number of tenants struggling to meet their rental payments to landlords in the six months to March 2012.
As a result, an increasing number of tenants are attempting to ‘knock down’ the price of their rent when negotiating with landlords. Haggling on rents has become most prevalent in the North East of England and the South West, whereas it is least prevalent in London.
‘With unemployment predicted to rise and average rents also increasing in some parts of the country, it seems more and more tenants are finding it impossible to make ends meet. It is likely that the same is happening for landlords, who may find their mortgage rate is rising. At worst, this double whammy may result in landlords defaulting on mortgages and tenants being forced to move out of a property,’ said Ian Potter, operations manager at ARLA.
His colleague, Tim Hyatt, ARLA president, said that the situation highlights just how important it is for both landlords and tenants to carry out thorough research and, where possible, checks before signing a tenancy agreement.
‘Our research shows that around 10% of tenants are asking for references on a potential landlord, but that is a relatively small proportion. We would urge anyone about to embark on renting or letting out a property, to consult a professional, licensed ARLA letting agent who will be able to advice on the possible financial viability checks that can be made,’ he added.
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The picture varies slightly around the country. In Hertfordshire there has been a steady rise in rental amounts being asked and achieved over the last six to eight months, according to ARLA spokesperson Jane Gardner, lettings director at Sewell & Gardner.
‘This has had a knock on effect on rental arrears with more tenants struggling to keep up with the higher rents. At the same time, we’re seeing the gradual return of the investor landlord to the market. We hope this rental stock increase will level out the asking prices to see a return to a happier tenant landlord equilibrium,’ she added.
Claire Lloyd, managing director of Claire Lloyd Properties has found that rental prices in the Buckinghamshire area have increased slightly over the past 12 months but in more recent months they appear to have levelled out to where they were a year ago.
‘Only very unique, quality properties command higher rents, albeit in some places rents are being over priced. Rental arrears have not been a problem for us and as we qualify applicants well with 85% pass referencing. Investors are coming back slowly but surely, we have a vast amount of new-builds and developments, including a new dairy off the A41 with 600 employees in the area, meaning prospects are good,’ she explained.
February was the best month for over a decade, according to ARLA spokesperson for Wolverhampton and the Midlands, Sally Lawson, managing director of Concentric Lettings.
‘This was due to a mixture of a good level of tenant enquiries, high value properties rented and high conversion into lets. In regards to landlord instructions however, we have seen a lot more landlords opting for the let only or rent collection only service this month, rather than the fully managed service. We usually get around 25% opt for the let only service of all the take ons that we have, but this month it was 60%, we are hoping it was a one off, but we will certainly be monitoring the progress over the next month,’ she said.
In the Kent area, the number of applicants registering with letting agents is at an all time high and this trend looks like it will continue, according to Robert Feast, area meetings Manager at Ward and Partners Residential Lettings.
‘However, we are finding we can realistically filter only 80 to 85% of the applicants into proceedable tenants, which highlights the growing concern regarding tenant suitability due to poor affordability and detrimental credit issues,’ he explained.
There is an increase in tenants asking what checks can be carried out on landlords in the Cheshire, greater Manchester, Merseyside and North Wales region, according to ARLA spokesperson Philip Chadwick, director of Gascoigne Halman.
Although the rental market in Essex appears to be extremely buoyant, with exceptionally high demand and low rental stock, landlords are becoming increasingly reliant on more substantial financial checks on in-coming tenants, ARLA spokesperson Sarah Holdsworth, managing director of Prime Property Management, has found.
‘There appears to be an increased proportion of tenants who claim benefits choosing to use their housing benefits for things other than rent payments which results in arrears and increased property possessions,’ she said.
In Berkshire and Oxfordshire ARLA spokesperson Mary Charsley, associate director at APW Management has experienced more instances of our corporate tenants are looking for copies of clients’ lender’s consent to letting. ‘In the past lenders consent would usually suffice, nowadays relocation agents acting on behalf of corporate clients are looking to have a copy of the consent before they proceed with an offer,’ she explained.
‘Some very large corporate tenants are even asking to have sight of this before they show a property to a potential assignee just in case it is not eventually forthcoming and the company is not able to proceed with a tenancy on a property the assignee has chosen,’ she added.
This article was republished with permission from Property Wire.