UK Landlords facing Unpaid Rent crisis

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landlords struggling with unpaid rent

Unpaid Rent with the cost of living crisis are continuing to impact nearly every area of our daily lives. New research has revealed that landlords are growing increasingly concerned about their tenant’s ability to pay their rent, with 44% admitting this is a big stressor for them as we head into the new year.

Landlords owed an average of £725 in unpaid rent

According to the survey, landlords in the UK are experiencing an average of 2.9 late payments per year, though this does differ slightly across the country. Landlords in Yorkshire and the North East see the highest amount of late payments each year, at around 3.4.

The financial impact of late rent is also significant. Molo’s study found that landlords are owed an average of £725 from late and unpaid rent, though again this does differ by region.

Landlords in Greater London are owed the most, at £806, though perhaps this is not surprising given that Molo’s research found higher rental prices in the capital city. This is followed by those in the East of England (£770) and the East Midlands (£760). Landlords in the North West are owed the least in late and unpaid rent payments, but this is still a significant amount of around £661.

Almost 60% of landlords in the UK have seen an increase in late payments amidst the cost of living crisis

From food prices to energy bills, many Brits have felt the squeeze since the start of the cost of living crisis (late 2021 until now). When it comes to the rental market, 59% of landlords say they have seen an increase in late payments amidst the current financial climate.

Late rent payments are only the tip of the iceberg too. 56% of landlords have had tenants move out as they could no longer afford the rent. Meanwhile, a further 55% have also found themselves reducing the price of rent to support tenants during this time. This number increases to as many as 68% for landlords in the Greater London and Yorkshire regions.

How landlords can support tenants during the financial crisis

VP of Strategy at Molo, Mark Michaelides, explains: “As costs continue to rise, this can be a stressful time for both landlords and tenants. But there are ways to effectively (and kindly) handle late payments with tenants, to make sure they are supported during this challenging period.

Have honest conversations

“The best thing you can do is keep communication lines open. 41% of landlords have had to evict tenants because of late payments, but you need to make sure you’re having honest conversations first. Try to understand the issue, and discuss the steps that you both might need to take to come to a solution.

Evictions should be the very last resort and need to be handled legally through court proceedings.

Set up payment plans for unpaid rent

“The study has revealed that over half (54%) of landlords have set up payment plans to support tenants with late payments, at some point during their career as a landlord. This goes up to a huge 77% for landlords in Birmingham.

“If your tenant does fall into rent arrears, you can figure out a repayment plan together. Discuss how much they can afford to pay each month, and compare this to your mortgage rate, to find an amount that will work best for both of you.

Look into what support is available

“It could also be worth doing your research into what support might be available to your tenant, so you can pass on the information. The government’s Help for Households scheme has been set up to specifically help with the cost of living, and tenants might also be eligible for Universal Credit for housing costs, or a reduction in council tax.

Make your rental property energy-efficient

“With the rising cost of energy prices, another way landlords can help tenants is to make sure their property is as energy efficient as possible. Things like improving insulation, switching to LED and energy-saving lighting, installing double-glazed windows, or sealing cracks and holes should all help to keep energy bills down.

Price fairly

“If you’re looking to expand your portfolio, you need to choose an area and property which is a good investment for you. But, you need to also make sure you’re setting the right rental price to attract tenants, especially amidst the current financial crisis.”

On how tenants can broach the topic of late rent with a landlord, Mark adds: “Nearly two-thirds of landlords have seen an increase in late rent payments due to the cost of living crisis, but this doesn’t always have to lead to extreme measures against tenants.

“As a tenant, it’s important not to ignore the problem. I’d advise tenants to communicate promptly, explaining reasons for delays and requesting additional time. Open dialogue can lead to collaborative solutions.”

He concludes: “Our recent research found that over half (54%) of landlords have implemented payment plans for tenants facing late rent. Additionally, tenants can explore government schemes and seek guidance from organizations like Shelter or Citizens Advice for free support and advice.”

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