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Landlords forced into credit balancing act between lenders and tenants

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  • 17/02/2014
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Landlords forced into credit balancing act between lenders and tenants
Landlords are absorbing losses from rental arrears in order to keep up buy-to-let mortgage payments, government statistics have indicated.

Figures from the Ministry of Justice revealed the number of landlords trying to evict tenants has increased by more than a quarter since 2010.

And while this strend ahs fluctuated between 2010 to 2012, 2013 has seen a steady increase in claims at court for possession.

But figures released by the Council of Mortgage Lenders showed buy-to-let repossessions fell by 16% in 2013 compared to the year before which highlights landlords are still coping with their commitments despite struggling to collect rent.

Chris Norris, head of policy at the National Landlords Association, said landlords are “caught in the middle” of lender demands and tenants’ payment difficulties.

“Apart from a blip after the crunch landlord repossessions have stayed remarkably low mostly because you have lots of landlords with portfolios,” he said.

“They use the portfolios to cushion the problem of not receiving the full amount of rent on one property with the rent from another.”

Norris said that the MoJ statistics did not differentiate between social and private landlords so it was difficult to pinpoint the scale of the trend but coping with rent arrears was definitely an issue for landlords in certain parts of the country.

Across the UK wages have failed to keep pace with inflation and cuts in housing allowance have added an extra strain on tenant’s finances.

Seb Klier, policy and campaigns manager Generation Rent, a charity set up for the protection of private sector tenants, said the rise in the cost of living since 2008 has made it increasingly hard for private tenants to keep up with payments.

He said: “Rising energy bills and increased rents due to greater demands on housing stock in the private rented sector are creating an ongoing pressure on renters.

“The landlord tenant relationship should be about working out a fair rent for the property but an Assured Shorthold Tenancy agreement does not provide the protection and leverage tenants require to be able to effectively negotiate this payment.”

Klier said that because of the shortage of social housing more tenants are being placed in private accomodation resulting in extra pressure in the form of bedroom tax, with the scrapping of council tax exemptions “spilling over” into the private rental market.

 

 

 

 

 

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