LETTINGSnews
lettings market
Rise in Tenant Problems Paying Rent
Increasing numbers of tenants appear to be struggling to make rental payments,
according to letting agents. According to latest research
from the Association of Residential Letting Agents (ARLA) in the fourth quarter 2010, 40 per cent of ARLA members reported an increase in tenants struggling to meet rental payments in the preceding six
COUrt repOrt
‘Clerical error’ costs £16k
A letting agent has been ordered to pay £16,295 after pleading guilty to failing to obtain a licence
for a student property. Thomas James Lettings Limited
was fined £6,400 and ordered to pay £3,932.67 costs and a £15 victim surcharge for failing to apply for an HMO (house in multiple occupancy) licence for a house in Lenton, Nottinghamshire. Thomas Reynolds, the company’s director, was also fined £2,000 plus £3,932.67 costs and a £15 victim surcharge. Failure to obtain a licence, which costs £640 for five years, is contrary to the Housing Act 2004. During sentencing at Nottingham Magistrates’ Court, District Judge Tim Devas pointed out that the property in Hungerton Street was not dangerous and the failure to licence was not deliberate. But he said the company, which has offices in Upper Parliament Street, in the city centre, and in Ruddington, must have expected to pay the penalty. Speaking after the hearing, Mr
Reynolds said, “This issue arose from a minor clerical error and is not a true reflection on the way Thomas James conducts business. We manage in excess 600 properties and have very good relationships with our landlords and tenants.”
34 FEBRUARY 2011 PROPERTYdrum
months – a rise from 35.9 per cent in Q3 2010. This is the first time the number
has increased in 18 months, suggesting that job losses and pay cuts are beginning to take hold, causing tenants to have difficulties. The situation was least
noticeable in Central London, where just under a third (27.9 per cent) of members reported an increase, compared with the rest of the UK (46.4 per cent).
market view Landlords say rents to rise in 2011
Four out of 10 landlords in the private rented sector plan to increase the
rent they charge tenants during the next 12 months on the back of strong levels of tenant demand, research from buy-to-let mortgage specialist The Paragon Group has revealed. Paragon’s research shows that 41 per cent of landlords plan to increase rents during 2011, with 55 per cent planning to keep rents at 2010 levels. Just four per cent of landlords will reduce the rent they charge. Nearly a third of landlords (30.7 per cent) plan to increase rents by up to four per cent of the current value, with 10 per cent aiming to increase the rent they charge tenants by between four per cent and eight per cent. Rents in the private rented
sector have risen steadily throughout 2010, with the Royal Institution of Chartered Surveyors (RICS) reporting that more surveyors recorded rent increases than falls in each of the first three quarters of the year. RICS latest Residential Lettings Survey showed that 34 per cent more surveyors expect a rise in rents than a fall during Q4.
Ian Potter, Operations Manager at ARLA, said, “At the beginning of last year we predicted that the number of tenants having difficulties paying rent would increase and unfortunately, this seems to be the case today. “It is a situation which can
have serious repercussions throughout the PRS as, without guaranteed rent income, landlords may also have problems paying mortgages. At worst, it may result in a rise in repossessions.
“While it is difficult for landlords
to predict whether current or prospective tenants will hit financial difficulties, our research highlights the importance for landlords or agents to implement a thorough selection process and to conduct reference checks on potential tenants – and to consider the benefits of rental protection insurance.”
See page 40 for a new range of
such schemes which have just been launched by Homelet.
‘Tenant demand has risen faster than supply during 2010’
Landlords’ expectations for
rental inflation are mirrored by their view of tenant demand over the next 12 months. Just under half (45 per cent) of landlords believe tenant demand will continue to grow during the year, with 44 per cent forecasting that it will stabilise. Nigel Terrington, Paragon
Group chief executive, says, “Landlords are in a strong
position. Tenant demand has risen faster than supply during 2010 and that is expected to continue well into 2011. This is reflected in landlords’ expectations of future levels of tenant demand and also the rent they are planning to charge for their properties. “There continues to be a lack of finance available in the UK mortgage market, meaning that many potential buyers are opting to rent instead. Meanwhile, many of the factors that have driven tenant demand in recent years, such as positive net migration, high student numbers and people preferring to buy later in life, are continuing.”
www.paragon-group.co.uk
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