With mortgage arrears on the increase, and more consumers struggling with debt, Landlord Mortgages has warned rental voids are now more likely. With this in mind, they have compiled a list of tips to help landlords avoid this problem.
Maintain close contact
Many landlords do not deal closely with their tenants, instead choosing to use an agent. However close contact between all parties will allow for greater sharing of information and a lower likelihood of a tenant defaulting on their rent.
Ask for good references
By requiring potential tenants to provide several solid references the landlord will be in a better position to separate the reliable tenants from the defaulters before anyone even moves into the property.
Purchase good insurance
If all goes awry, good landlord insurance will insure against any losses suffered at the hands of a defaulting tenant. However, be warned as if you make regular claims, the premiums will climb higher.
Choose affordable property
Landlord Mortgages’ internal data shows rental voids are more likely to occur on more expensive properties. Therefore by purchasing a mid-range buy-to-let property you can avoid defaults as tenants are more likely to be able to pay the rent.
Act fast
Many landlords only realise there is a problem when the tenants first miss a payment. At this point, it is imperative to enter immediate dialogue with them as all too often this will be followed by more non payment and excuses then no contact, and ultimately a costly chase to retrieve the missing funds.
Be organised
Poor organisation of your property finances and paperwork will leave a landlord wide open to missing any problems. Keeping a close eye on everything to do with the property will mean that it is less likely for rental arrears to go unnoticed.
Be understanding
Rental voids are a cardinal sin in the buy-to-let world and need to be avoided at all costs. If a tenant is struggling to pay, due to a temporary financial crisis, show understanding and offer a payment holiday, allowing for a reduced rent to be paid initially. After all some rent is better than no rent.
Lee Grandin, managing director at Landlord Mortgages, commented: “Many landlords find that at some point they have been faced with a defaulting tenant. It is important for landlords to be on their guard against this in order to avoid financial ruin themselves.
“If a payment crisis does occur, often damage limitation can be the best course of action. If this means that a tenant has to pay less in the short term until they find their feet and can pay back the arrears then this may be the best solution. At the very least it will keep the lines of communication open and keep some payment rolling in during the interim period.
“At Landlord Mortgages we encourage people to consider buy-to-let as an investment option. As part of this, potential investors need to fully understand the associated risks in order to make informed decisions. We hope landlords will heed our warnings and manage their portfolios prudently.”
