Christmas time is expensive and the New Year not only brings tight budgets, it’s also a prime time for family break-ups and relationship problems, so rent payment is often the casualty.
What’s more, this year landlords are under more pressure from property tax rises, so rents are likely to climb.
A recent Rent Guard Insurance news release says that tenants’ arrears are likely to be the biggest issue facing the rental sector next year, unless the government scraps its proposed tax changes for landlords, something that most experts now think is unlikely, especially as there was no mention of it in the Autumn Statement.
On-line letting agency Upad says it is witnessing the rent arrears problem grow again, despite the proportion of tenants in arrears having improved since the last recession.
Almost 10% of tenants fell behind with the rent in August, while 34,000 landlords issued possession claims between July and September, according to research from Savills and figures issued by the Ministry of Justice.
James Davis explains, chief executive at Upad says:
“Increased landlord costs will only make matters worse, especially for tenants who in some of the most expensive areas, such as our capital, are paying up to two thirds of their salary on rent”
“Over-stretched landlords will try to recoup these additional taxes by increasing rents, but if wages struggle to increase more than inflation, landlords will struggle to secure rises, putting the entire lettings financial model at risk,” Mr Davies claims.
A campaign “Axe the Tenant Tax” was earlier this year led by private landlords Chris Cooper and Steve Bolton who went to court seeking a judicial review. Unfortunately their efforts failed to get the desired review of the government’s controversial mortgage interest relief changes which are due to commence from April next.
However, the Residential Landlords Association (RLA) has said it is continuing to lobby Government ‘at the very highest level’ with a view to persuading the chancellor Philip Hammond to rethink plans to stop the government from reclassifying mortgage interest as anything other than a normal business expense.
In a survey the RLA found that 84% of private sector landlords are likely to consider increasing rents following the Chancellor’s ‘tax assault’ on the buy-to-let sector announced earlier this year.
“We need a last push ahead of the Autumn Statement. We need to hammer home to the Government just how devastating these changes will be and we need to stand together to oppose this unjust tax and fight for a fair deal for the PRS landlord,” said RLA chairman Alan Ward.
If you are having problems with rent arrears download the LandlordZONE® Rent Arrears Letter and Rent Schedule here: www.landlordzone.co.uk/documents