Since the start of the recession the private rented sector has experienced a surge in demand with 20,000 – 50,000 new registrations per month in 2011.
UK landlords are aware that demand is outstripping supply and are rushing to cash in, often without making the right checks on new tenants. This is a very costly mistake for landlords, they are promised all that they ask for by the potential tenant and end up severely out of pocket having to evict the tenant a few months down the line when rent arrears are substantial.
The demand for rental property is set to remain very strong and continue well into 2012 due to the fragility of the UK economy, the continuing Eurozone economic crisis, the strict lending criteria imposed by UK Banks and Mortgage lenders and the challenge of raising large deposits, all deterring potential home buyers from purchasing their own property.
With the UK Government’s Welfare Reforms coming fully into effect in January 2012 UK landlords are warned to make thorough checks when referencing new tenants, to avoid any financial nightmares.
Legal4Landlords spokesman Sim Sekhon said “Comprehensive checks into the background and financial status of potential new tenants may seem a little over the top to many tenants, but they are very important to landlords as they are basically assessing the potential financial risk to their property letting business and need to be aware of any and all matters that may affect their income.”
Despite the buoyant market conditions, rising rent prices and higher living costs have led to an increase in rent arrears and landlords need to be aware of the growing possibility of tenants defaulting on payments and when to consider eviction.