Rise in Tenants not Paying Rent

publication date: Aug 15, 2011
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books

Rise in Tenants not Paying Rent

Landlord Action sees an 11% rise in Instructions against Defaulting Tenants

Landlord Action, a company specialising in tenant eviction, is starting to see the effects that a squeeze on the money left in people's pockets from the latest government cuts together with the increased cost of living are having on the rental sector, as their number of instructions against tenants not paying their rent has risen by 11% year on year.

Paul Shamplina, founder of Landlord Action, believes that landlords are feeling the increasing pressure on their finances as a result of defaulting tenants, but this year they are simply less tolerant than they might have been in previous years.

Paul comments "Tenants are stuck in a catch twenty-two situation. Lending criteria requiring large deposits has locked many out of making a purchase and yet, high demand and low supply of rental properties is pushing rents to record highs. As a result 8,700 more tenants compared to this time last year are over two months in arrears according to Templeton, and this figure is rapidly climbing. Unfortunately, where landlords may have once been more lenient, they can no longer afford to be, especially with the knowledge that they could readily rent to someone else who can afford the payments."

According to Landlord Action, this rise has also been contributed to by amateur landlords who would rather rush the process in order to avoid void periods in their rental income. "Time and time again we reiterate the importance of thorough referencing procedures, but far too many landlords would still rather pre-empt having to evict a bad tenant than pay out or wait for the correct due diligence and this lack of attention has seen court orders to evict tenants increase by 9% in the last year."

The full impact of public sector spending cuts are still to be seen, but landlords renting to Local Housing Allowance (LHA) tenants have already expressed concern over tenants not being able to meet payments since the new caps came into force in April. Landlord Action has seen evidence of some landlords taking action to protect themselves to avoid falling behind with mortgage payments. Paul adds "As anticipated, earlier in the year when caps to LHA benefits were announced, we have seen a sharp rise in the number of landlords serving Section 21 two month notices on their LHA tenants and issuing accelerated possession proceedings". A Section 21 allows landlords to terminate the tenancy at the end of its fixed term and give no reason for eviction.


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