The past few years have brought tough times for landlords. Increasingly complex regulations, drastic changes to the industry, the Tenant Fees Ban, the threat of increased letting agent fees, Universal Credit, increasing tenant arrears and new licensing rules to name just a few!
Worrying Facts and Figures
- 1 in 3 tenants on low wages need to borrow money just to keep up with monthly rent payments
- A third of landlords experienced rent arrears in 2018 according to RLA
- Almost half of tenants who fall behind with rent won’t end up paying it back – even after evictions and/or legal proceedings
- UK landlords lose almost £1 billion to rent arrears each year
- Landlords spend £9.9 billion a year covering property damage, repairs and rent arrears
- This equates to £6,600 for every landlord in the UK!
But don’t worry, it’s not all doom and gloom. Landlords are discovering a new solution that combats this problem very effectively – scroll down to the end of this article to find out more…
So, Why Are Tenants Falling Behind with Rent Payments?
Unfortunately for landlords, utility bills, credit card payments and even mobile phone contracts will often take priority over rent payments when it comes to your tenant’s financial priorities.
There is one very simple reason for this…
A missed utility bill or a late payment for a phone contract could do serious damage to your tenant’s finances in the long run by leaving a negative mark on their credit histories. A missed rent payment, on the other hand, won’t be reflected in a tenant’s credit score. Similarly, a tenant won’t receive any benefit to their credit file by consistently paying their rent on time, so there is little incentive for them to make paying rent their top priority.
But what if you could beat the system and get Experian to register your tenant’s rent payments right now…. We’ve started working with Experian to help landlords do just that! Scroll to the last section of this article to find out how.
The Ticking Time Bomb in the Buy To Let Boom
Over the past decade in the UK there has been a huge increase in the number of Buy To Let rental properties on the market. Property investment has always been a firm favourite among both large-scale investors and individuals trying to increase their pension savings. But the Buy To Let model has become by far the most popular investment option thanks to dirt low interest rates and high demand for rental properties.
The incredibly low interest rates that we have enjoyed over the past decade have made the idea of keeping your savings tucked away in a “high” interest ISA far less attractive. With such low returns on savings accounts, Brits started exploring alternative investment options, and Buy To Let property came out on top as one of the best ways to make your savings work for you.
However, with low wages and increasing rents making it difficult for tenants to stay afloat, the number of tenants falling into arrears is on the up. This poses a massive problem for Buy To Let landlords who, in many cases, rely on their rental income to cover their BTL mortgage payments.
Landlords have already had their finances put under pressure by the Stamp Duty increase for second home purchases and Section 24 tax changes. In fact, a recent survey claimed that 1 in 5 Buy To Let landlords would struggle to pay the mortgage for their rental properties if their tenants missed just one month’s rent payment!
This is why it’s more important now than ever before that landlords do anything and everything in their power to safeguard their rental income.
So How Can You Make Sure Your Rental Income is Bomb-Proof?
Landlords and investors have understandably been wary of Guaranteed Rent or Rent to Rent Schemes (whereby a company commits to paying your rent each month and then sublets the property to tenants for a slightly higher price) due to the fact that the scheme provider could fall into financial trouble and fail to pay out.
But there are other options available to safeguard your rental income…
Rental marketplace, TheHouseShop.com, have just launched their new RentScore Plus service that combines rent protection insurance and rent collection in partnership with Experian. The RentScore Plus service collects the rent on your behalf and automatically registers tenant’s rent payments with Experian – meaning that late or missed payments will finally be reflected on your tenant’s credit history!
This gives individual landlords the same power as large financial institutions to incentivise on-time payments and makes rent your tenant’s number one priority.
RentScore Plus also offers one of the best value rent protection insurance products currently available on the market. RentScore Plus will cover you for any unpaid rent, plus up to £100,000 worth of cover (per claim) for legal expenses and the cost of eviction proceedings. On top of this, the service will also pay out 75% of your rent for up to 2 months after successful eviction of your tenants – giving you the time to find new tenants without losing out on valuable rental income.
With all the above starting from just £14.99 per month – we think that’s a pretty small price to pay for financial peace of mind.
You can check out the RentScore Plus service in more detail on TheHouseShop’s website here: RentScore Plus | TheHouseShop. Or if you prefer, you can give them a call on 0800 048 8910 to talk it through with a real person (in our increasingly digitised world it’s always nice to speak to an actual human being every now and then!).