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Buy-to-let landlords warned of defaulting tenants

Wednesday, 29 October 2008 5:57 PM

Landlords are being warned the coming recession will bring higher numbers of tenants falling behind on their rent.

Unemployment is set to rise in the coming year as the economy contracts, and landlords are being urged to protect themselves.

Judienne Wood, lettings director at Kinleigh Folkard & Hayward, said: "It is inevitable that more tenants will default on their monthly payments as there is no sign of a brightening sky on the horizon of the economic climate and unemployment is rising.

"There is insurance to cover this eventuality and my advice to landlords is to make sure they are covered."

She added: "Another danger landlords should watch out for is for an increase in estate agents turning to the lettings market offering cheap deals - there's no truer adage than you get what you pay for."

Over the first six months of 2008, Kinleigh Folkard & Hayward has seen rents rise two per cent.

"Due to the current economic climate, we have seen a shift in supply and demand, with the supply of properties to let starting to outweigh demand from tenants," Ms Wood said.

"In 2009 the lettings market will remain fragile. We will continue to see a fall in tenants registering as most will not move unless they really need to."

She added tenants will see greater choice as more would-be sellers rent out their home and investors buy investment properties cheaply to rent out.

"Overall, 2009 will not be an easy year for the lettings market. Landlords who have good, well presented properties close to transport links and who are prepared to be flexible and negotiate on the rental price are likely to find tenants quicker and avoid void periods more than landlords who hang on for top dollar rents," Ms Wood concluded.

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