Influx of new tenants means rise in rent arrears

A recent survey by the National Landlords Association (NLA) has found that more than half of landlords in the UK have had to deal with rent arrears in the past month. The private-rented sector (PRS) currently encompasses around 14% of households in the UK and is projected to increase to 20% within the next five to ten years. It will overtake social housing as a proportion of households for the first time since the 1960's. This growth in the number of households relying on the PRS to supply their homes is altering the type of private sector tenants. As a result, landlords are having to develop new skills in order to successfully manage their tenancies and portfolios. The most pressing consequence of this expansion in renting (and recent economic conditions) is the increase in rent arrears and the pressure it can put on a landlord's business. Figures from a survey run by the NLA for the beginning of 2011 show that more than half of landlords (52%) have dealt with rent arrears in the last 12 months. This has a major financial impact on housing providers; the average non-paying tenant owes his or her landlord more than £700. If this were not concerning enough, the survey's statistics for recipients of Local Housing Allowance (LHA) make for even more sobering reading. Approximately half of all PRS tenancies involve a recipient of LHA and in the last three months alone LHA tenants have owed an average of £210 in late payments. Pressure on LHA tenants is bound to increase as the government continues with its planned cuts to benefits. These figures are indicative of a trend that has been developing for a number of years. Landlords now have tenants traditionally catered for by other providers, such as social housing. This means that landlords need to assess the way in which they go about their business. The NLA works with thousands of landlords every month to help them deal with challenges properly, efficiently and effectively. Increasingly, this means supporting them over rent arrears. In general, landlords encountering rent arrears should bear the following in mind: Prevention is better than cure. Thoroughly vetting your prospective tenant (while not fool proof) can reduce your risk and the likelihood of arrears. Alternatively an insurance policy, such as those offered by NLA Rent Guarantee Insurance, can help to limit the damage of future problems. Don't delay. If the rent is late contact your tenant (politely) and find out if there is a problem. This may highlight potential issues early enough to reach an amicable solution. Communication saves tenancies. If possible keep lines of communication open throughout your tenancy; this will make it easier for your tenant to bring issues to your attention. It's important that you aren't viewed as a faceless service provider; be approachable. Keep an open mind. Would it be better to renegotiate a lower rent for the time being rather than try to find new tenants? Sometimes it can be worth being flexible to save a working tenancy – rather than incur the expense of re-letting. Details matter. Get it right first time and save yourself a lot of time and money. Courts notice errors, so if the worst happens and you have to resort to ending the tenancy, make sure that you have the details right. David Salusbury is Chairman of the NLA This content is brought to you by Guardian Professional. Join the housing network for more like this direct to your inbox.