Last month, BDRC Continental’s Landlord survey found that the number of single property landlords making a loss doubled during the second quarter of 2012, with 16% of properties now losing money.
Lee Farringdon, mortgage adviser at Amber Mortgage Solutions said that landlords struggling with tenant arrears are more likely to turn to lenders than brokers.
“Almost 30% of my business is buy-to-let but I don’t see very many landlords struggling with tenant arrears. If a landlord came to me I would first see whether we could find a solution to help them. Any letting agent or property manager should contact a tenant as soon as a payment problem arises, and by identifying this early on, it prevents the problem from growing.
“If the problem is bigger than this then it’s worth the landlord speaking to a lender to see how they should proceed. Landlords and their lenders do have options to prevent tenant arrears from growing into long-term mortgage arrears for the landlord.”
Mark Long, director at BDRC Continental insists that it is a tough time for private landlords who only have one property in their portfolio.
“Over the last quarter profitability has clearly taken a dive. Regardless of their size, there is no question the private rental sector relies on private landlords and, whilst a third may aspire to increase their property portfolio, they will only be able to achieve this goal and add to Britain’s privately rented housing stock if they can make a profit from that one property.”
Tips for Landlords
John Heron, managing director of Paragon Mortgages offers his tips on what Landlords should do if they are struggling with arrears
Rental arrears in the buy-to-let market have remained relatively stable, even declining slightly in 2011 compared with the owner-occupied market. However, if landlords are worried about a tenant falling into arrears there are steps they can take to help minimise the risk:
– Professional tenant referencing – get to know a tenant before you let the property to them
– Have a good rental guarantee in place
– Good quality tenant and property management – happy tenants tend not to go into arrears
– Be sympathetic to tenants with temporary payment issues, helping them find a solution helps everyone involved
– Understand and know how to access housing benefit for tenants in difficulty
– Make realistic provision for voids and rental arrears when considering mortgage affordability
– Most importantly, keep the lines of communication open
