A third of the respondents to our survey admitted that at most one of their tenants was in arrears. Landlords need to take steps in order to protect their business from these risks and to manage them.
However, the current economic climate could make it difficult. Young people are looking for rent due to the inability of banks lend money to potential first-time buyers. Studio and apartment rentals are highly sought after because they are affordable and well-maintained. But how can landlords assess the risks and minimize those who might not be able or able to pay their rent?
There are several ways you can do it. First, and most commonly, you can request a deposit in addition to a month’s rent in advanced. The landlord is protected in the short-term, and, assuming that there aren’t any damages, they have a monthly to two month’s rent that they can keep in case the tenant defaults on their obligations. This does not cover costs associated with evicting tenants, decorating and repairing the property, or advertising the property for rent.
MoneySupermarket.com’s study also found that landlords who have tenants behind on rent could be eligible for landlord insurance. A Commercial Insurance Broker will be able advise landlords on how best to guard against risks and how to manage those they can’t avoid. After this, it is common for the broker to recommend a tailor-made Insurance policy that could help. If a tenant fails to pay rent, a policy like this can help the landlord to recover the costs of removing the tenant and replacing them by a more profitable tenant.
For a claim to be successful, you need to have more stringent controls. Tenancy application forms have become more complex as circumstances change. They now require extensive detail. Potential tenants may now be subject to credit checks and other assessments in order to assess the risk they present. It is possible to request a guarantor, who is also a homeowner. This person is responsible for any costs incurred if the tenant fails to comply with their tenancy agreement. Additionally, references from former landlords and employers are required for some applications.
Tenants who have passed all the checks might appear to be perfect tenants. However, they may still lose their jobs soon after receiving the keys. As GAME’s administration proves, However, these checks can pose problems because it can be difficult for recent graduates to obtain a property. This is especially true when students move house every academic year, which can lead to a low credit score.
