Dealing with renters at risk

by Gary Whittaker

There has been plenty of recent data to show that rent increases have slowed, particularly in more expensive parts of the UK. However, landlords and letting agents may need to be aware of the scale of financial danger faced by many of their tenants.

Sum of all fears

A survey by Scottish Widows revealed that 39 per cent of private renters could be either left homeless or be unaware what they could do to seek help if they were suddenly and unexpectedly unable to pay the rent. 

Indeed, the poll found that not being able to pay rent was the biggest fear among tenants, with 51 per cent expressing this concern. This equates to more than four million people.

Other major concerns included paying over the odds (46 per cent), having a bad landlord (39 per cent), being locked into a bad commute (26 per cent) and living alone (21 per cent). 

A key finding that agents and landlords should note is that the fears about being potentially unable to pay rent are far from being unfounded. It found only 22 per cent have life insurance and a mere four per cent have critical illness cover.

In the first instance, that means some tenants could find their incomes plummeting if they suffer a severe accident or illness, while in the case of couples, a bereaved next-of-kin might end up unable to pay, particularly if they have just faced the sudden cost of a funeral. 

No plan B

These dire scenarios are not the only possible problem. The study also found renters tend to have less money saved up to fall back on in an emergency. The average amount they have set aside is £9,260, whereas those with mortgages have an average of £21,152. 

When asked what they would do if unable to pay, 24 per cent admitted they had not thought of a solution. Of those who had, 44 per cent said they would ask their parents to help and 41 per cent would move back into the parental home. Needless to say, apart from such a step representing a painful loss of independence, not everyone will be in a position where their parents would be able to assist in either of these ways. 

Johnny Timpson, a protection specialist at Scottish Widows, said: “It’s important for people living in rental accommodation to understand the risks of signing a tenancy contract without any financial back-up in place, particularly if they don’t have much in the way of savings.

“Our research demonstrates how critical it is to think ahead, and while no-one wants to think about the worst happening, having a safety net in place will provide peace of mind about avoiding eviction and being able to keep up with regular outgoings such as household bills.”

How to respond 

For landlords and agents, it is important to be aware of the potential problems they can face from the precarious finances of some tenants. This could mean a sudden loss of rental income and some very difficult eviction decisions, particularly when a tenant's misfortune would make a sympathetic approach a justified and humane response. 

Among useful steps that can be taken would be to discuss these issues with tenants before they arise, to help renters think about what they can do and take steps to make their situation safer. 

It would also help for landlords to have an agreed process in place if tenants do run into trouble, so that renters can contact them early when difficulties start in order to work out solutions before matters get out of hand. This approach will not only avoid financial shocks and evictions, but could help build trust between tenants and landlords. 

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26-January-18General Lettings News