Property News Archive

Monday 5th January 2009

Landlords 'need to take out rent payment guarantee'

As unemployment reaches the highest level in 11 years, insurance providers are advising agents to ensure their landlords' rental income is properly protected.

One insurer, HomeLet, is anticipating the number of rent guarantee claims it will pay out will rise sharply in 2009, in line with increasing redundancies and lack of new jobs.

Unemployment in Britain is expected to reach 3.1m, or 10% of the workforce, this year, according to the British Chambers of Commerce. In October, it was 6%. Another body, the Chartered Institute of Personnel and Development, warns that at least 600,000 people will lose their jobs this year, mainly between now and Easter. It also predicts that those who hang on to work during 2009 will have their pay frozen or even cut.

John Boyle, managing director of HomeLet, said: "Last year, we paid out £2.7m in rent guarantee claims and we anticipate that this figure will continue to rise as tenants find themselves out of work and unable to meet their financial commitments.

"Worryingly, a study by Experian also revealed that 23% of tenants have no issue with exaggerating their income in order to land a rental property. A further 4% are happy to lie to a landlord about the job they do and this can lead to big problems for landlords in the future.

"The boom in the rental market is enticing more people into the lettings industry, including estate agents who are keen to refocus their business or make the transition into lettings to take advantage of this increasingly profitable revenue stream.

However, as more and more property owners become 'accidental' landlords while they wait for house prices to recover, letting agents have a burgeoning responsibility to ensure their landlords' income is properly protected."