Press Release
Rental arrears on the rise: Landlords and tenants must work together, says the NLA
27 July 2012
According to the latest Landlords Panel conducted by the National Landlords Association (NLA), rental arrears are on the rise.
Just under 50 per cent (49%) of landlords have experienced rental arrears in the last 12 months and 37 per cent of landlords are worried about instances of arrears in the months ahead.
According to the research, a typical NLA member landlord, with an average portfolio of 12 lettings, has 4 tenants in arrears and the average arrears owed by tenants is £2,363. As might be expected, landlords with larger portfolios have greater amounts owed to them.
Arrears problems are also affecting small scale landlords (landlords with one letting), including accidental landlords, who make up a large proportion of all landlords. In fact, 16 per cent of landlords with one letting are making a loss on their investment.
David Salusbury, NLA Chairman, says:“It is a sign of the difficult economic conditions that so many landlords are experiencing rental arrears. In these circumstances, landlords should work with their tenants to minimise the impact of financial stress. Short term instances of arrears can often be resolved with a sensible repayment plan or a temporary reduced rent arrangement. It is in landlords' best interests to help tenants through tough financial times where possible.
“Landlords who work collaboratively with their tenants towards sustaining the tenancy for the long term will encourage prosperous tenancies. It is professional and collaborative working that will help ensure the private-rental market remains a promising investment opportunity, in turn helping to bring the economy back to an upward trend.”
The National Landlords Association offers the following advice to landlords experiencing rental arrears:
Background checks
When recruiting new tenants, be sure to carry out the appropriate tenant checks to ensure they are in a position to meet their rental commitment.
Build a good relationship
Upon meeting new tenants, ensure you are open and approachable.
Take a deposit
By law, a deposit must be protected in one of three government licensed schemes such as my|deposits. The Scottish law is slightly different but tenancy deposit protection remains a legal requirement.
Work together
If a tenant is experiencing difficulties paying the rent, arrange to discuss the situation; it is important to work together to ensure an enduring tenancy.
Be alert
If the tenant has experienced a sudden change in circumstances, work with them to check they are receiving any benefits they may be entitled to. This could resolve the situation quickly and easily.
Set up a payment plan
If the tenant is not entitled to additional funds, work with them to arrange a short term solution such as a repayment plan or reduced rent arrangement.
Avoid substantial debts
If problems with payment continue despite a short term arrangement, it may be appropriate to negotiate bringing the tenancy to an early end in order to avoid accruing significant debts.
Be aware of the appropriate procedures
In situations where the tenant has failed to meet their rental payments for two months, the landlord is entitled to issue a Section 8 Notice to initiate possession proceedings. This must always be a last resort – professional landlords will favour good, sustainable tenancies over short lived tenancies that result in periods in which their property will lie vacant.
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