With tenant arrears surging by a fifth in a year, now may be a good time for landlords to think about taking out rent guarantee insurance.
According to the latest figures from Templeton LPA, some 94,400 tenants were at least two months behind with their rents in the three months to the end of March this year.
This is a rise of 20 per cent compared with the same period 12 months ago and up 10.2 per cent on the final quarter of 2011.
Landlords are also increasingly taking repossession cases before the courts with 24,702 tenants facing eviction notices in the first quarter of this year an increase of nine per cent on the previous quarter.
Templeton's Paul Jardine explained that while the majority of tenants have managed to absorb the rising cost of renting in the last two years, a growing minority are facing severe financial difficulties.
"These tenants have been pushed into deeper and deeper arrears by a combination of rising living costs, high rents and a weak labour market, and are now months behind with the rent cheque," he said.
"In turn these severe rental arrears figures have been inflated by the ongoing impact of county court closures. The closures have prolonged arrears cases, with landlords less able to gain court dates to quickly remove non-paying tenants."
Landlords can protect themselves from the impact of tenant arrears on their income by taking out rent guarantee insurance.
As well as guaranteeing the landlord a monthly income, this can also help cover the costs of legal action against tenants who fail to pay rent.
Landlords can also help minimise their chances of taking on a tenant who may be likely to refuse to pay rent or be unable to afford to keep up with payments by having professional tenant referencing carried out.
Posted by Simon Hayes