The tenant eviction and rent collection firm said that many tenants will come under increasing financial pressure over the coming months following the government’s announcement in the Spending Review that 490,000 public sector jobs are to go.
Landlord Assist warned that rising unemployment levels could result in increasing levels of arrears and missed payments, as tenants struggle to pay their rent, which will affect landlords’ ability to pay their mortgage.
It said that landlords most at risk were those on moderate incomes with tenants who receive some state assistance, which could well be withdrawn as part of the proposed cuts to the welfare system.
Graham Kinnear, director at Landlord Assist, said precautionary measures landlords should take included taking references to ensure the prospective tenant can afford the rent and asking for guarantors to cover the cost of missed payments.
He said: “Nearly all references include an employment reference nowadays, providing landlords with a great indication of a tenant’s employment history and current situation.
“However, when gaining a reference check landlords need to pay particular attention to the type of work. Only a few years ago the ideal tenant would be one working in the financial industry, but that is not the case anymore.”
Nevertheless, Kinnear acknowledged that no reference could forewarn a tenant becoming unemployed.
“With many more cuts expected in both the public and private sectors, many tenants may find themselves in financial difficulty over the coming months. This level of uncertainty is worrying for landlords and may encourage more to renew their interest in rent guarantee and legal expense insurance,” he said.
