The Daily Telegraph - Saturday - Money
The Secret Landlord
I’ve had to evict three tenants for unpaid rent this year – and it’s only going to get worse as the cost of living crisis bites
Loss of rent is such a big issue that I need to fork out extra every month in insurance premiums
“I’m not leaving until the bailiffs come.” That was the latest email sent to me from a tenant. This is the third tenant this year I am evicting due to rent arrears.
In my landlord career of 20 years, I have never seen an environment turn so quickly and so badly – and that includes the financial crisis and pandemic. The amount of money owed in rental arrears is in the thousands of pounds and quickly rising. Supposedly good tenants are souring quickly and I am left wondering who I can trust. The answer, I’m afraid, is no one.
The author of the latest email had a good job when they moved in last year. It’s the kind of safe job that will always be around. The salary easily covered the rent, affordability wasn’t an issue, and so I didn’t push (as I usually would) for a guarantor. That was a mistake I will not be making again.
Where before a guarantor was a preference, it will now be compulsory. This causes an administrative logjam, costing me time and money.
I am well aware of the cost- of-living crisis and I’m acutely concerned, not just for myself, but also my tenants. But I cannot condone withholding rent when I have a mortgage to pay myself.
Choosing not to pay rent has ended up with the tenant in court. A black mark will appear against their name for many years meaning they will struggle to obtain any form of credit or rent again. They will also have the threat of legal action against them for the next six years, which is how long I have to pursue them for the owed money.
Likely they’ll be forced, when they manage to find a new rental, to install a prepayment meter, and pay higher rates for utilities. If they end up homeless, the cost of any short-term accommodation in a hostel or B&B will be borne by the taxpayer.
The sad truth is that the actions of a few bad tenants will affect the many good ones. For the first time ever, I am now taking out rental protection insurance. I have always had legal expenses cover in place, but this only pays for the cost of solicitors, court fees and bailiffs – it doesn’t cover the missing rent.
Loss of rent is becoming a big issue, so big in fact, that I need to fork out extra every month in insurance premiums to cover the loss. The cost of this insurance has spiked, meaning any new rental needs to achieve at least 5pc higher rent to pay for the additional costs.
I suspect as rental arrears rise, increasing numbers of landlords will turn to this insurance, thus driving the premiums higher – which will in turn push rents higher still.
And there’s another problem. I, along with many other private landlords, am continuing to sell up. Faced with a barrage of bills and an increasingly hostile and inefficient regulatory environment, very few properties are now worth the effort of investing.
The net result is that there are fewer properties available to meet demand. With an increased reliance on insurance products to ensure rent will be paid, those tenants with anything less than a glowing reference will struggle to rent a decent property. This is not good or fair.
The risk is that those rogue landlords flourish, as tenants who don’t pass tougher referencing are pushed into lower quality accommodation.
For tenants, there is no longer room for error. The fact is, life can hit you hard – relationships break down and sometimes bills get forgotten. But these minor indiscretions will no longer be acceptable.
For today’s landlord, there is no buffer against mistakes; the wrong tenants cost too much. In the future, referencing will come down to whether the rental insurance company deems you a risk they are willing to take.