Shocking rise in rental arrears

Shocking rise in rental arrears

192.com launches Background Reports to reveal bad tenants 

  •         Severe rent arrears rose to 94000 in the first quarter of 2013
  •         National poll finds one in 10 have been conned by a lodger
  •         Austerity drives impoverished renters towards inexperienced landlords

192.com has launched the first ever Background Reports of UK residents, offering landlords instant and in-depth profiles of renters.

Background Reports detail negative financial indicators, residential history, property ownership, and neighbours contact details. Residential listings in the background reports will also display director’s records, and demographic profiles of neighbourhoods. Insolvency records and county court judgements in the Background Reports will reveal unpaid debts.

The Background Reports launch as a nationally representative poll from 192.com shows that one in 10 have been conned by a lodger. 192.com’s poll1 also found that:

  •            One in five sometimes or often conceal their identity
  •           12% have lied about where they live
  •           10% will lie to make money

Background checking is becoming increasingly important with the rise of renters not honouring their rental fees. In the first quarter of 2013 severe rent arrears rose by 4,000 to 94,000.2

This rent arrears count is the fourth highest figure on record, according to Paul Shamplina, Founder of Landlord Action. “The highest level ever was recorded in the second half of last year, and over the last 14 years, our experience of professional bad tenants has been plentiful,” he says.

“Professional bad tenants will seek out someone new to the market who is self-managing a property and who, out of desperation to avoid a void period, will accept a tenant with minimum referencing.”

“Some professional bad tenants will even entice a landlord to let to them by offering two to three months upfront rent instead of providing thorough referencing. They then will refuse to make any further payments.”

Dominic Blackburn, Product Director of 192.com said: “Background Reports can tell where someone have previously lived, who with, and if they’ve had trouble with debt – all vital information for your background check.”

Background Reports are particularly important for the millions of new landlords entering the rental market. Figures from the Council of Mortgage Lenders shows that gross buy-to-let lending was 19% higher than the £13.8 billion advanced in 2011, reaching its highest level for four years. 1.5 million investors held buy-to-let mortgages by the end of 2012.3

“Despite having no previous experience, many amateur landlords have tried to cut corners by not instructing a reputable letting agent and attempting to self-manage their property,” says Mr Shamplina.

“These landlords will be venerable to bad tenants who are often wise to the court procedures on eviction and will know how to play the system to delay proceedings,” he adds. 

According to Mr Shamplina the rise in problem tenants is due to a growing buy-to-let market, and a stagnant economy:

“A lack of affordable housing, with restricted funding in the mortgage market forcing more people to rent, combined with cuts to housing benefit, stagnant wages, and a rise in the cost of living and rising unemployment. The result? More problem tenants.” 

Mr Shamplina also says the ‘bedroom tax’ and housing benefit reform will put further pressure on landlords and tenants. “One of the greatest concerns for tenants is dealing with one, in many cases reduced, payment in place of the various benefits and tax-credits previously available.”

“Couple this with the impending bedroom-tax where some claimants will see their housing benefit portion reduced by up to 25% on the basis of under-occupancy, and it’s inevitable that landlords can expect shortfalls in rent. The whole system is in a sad state of affairs which is likely to lead to a greater number of impoverished tenants.”

Richard Lambert, CEO of the National Landlords Association has the following advice when taking on a lodger:  

  • It is important to be satisfied that appropriate tenant checks have been carried out before granting a tenancy. Landlords or letting agents should meet the potential tenant to check they are who they say they are before entering into a contract.
  • Landlords should carry out background checks on potential tenants to include referencing, credit reports and identity checks. This will help the landlord to build a picture of the potential tenant before offering a tenancy.
  • Landlords should take a deposit from their tenants and protect it in a government-endorsed tenancy deposit protection scheme such as my deposits.
  • Landlords should also carry out a full inventory and schedule of condition in case the tenant defaults on rental payments or causes damage to the property during the tenancy. This could provide vital evidence if there is a dispute over the return of the deposit when the tenancy ends.

Bryn Cole, Managing Director of tenant referencing specialists, FCC Paragon says:

“Typically a good reference will include a credit history check which will highlight any CCJ’s and bankruptcies, identity checks, affordability calculations and residency checks. However, we find it is just as important to obtain references from the current or previous employer and the current or previous landlord as this can potentially reveal more about the tenant’s suitability.”

192.com’s Background Reports are available for purchase through 192.com’s website and utilise data from leading official public sources including the Edited Electoral Roll, Companies House information, the Land Registry, the Insolvency Service and data from the Registry Trust.

Sources

 1 Conducted by One Poll, this was a nationally representative online poll of 2000 undertaken in March 2013.

 LSL Property Services Tenant Arrears Tracker for the first quarter of 2013. http://www.lslps.co.uk/documents/tenant_arrears_tracker_apr13.pdf

 http://www.cml.org.uk/cml/media/press/3423

192.com is the UK’s most awarded online directory, helping find people, businesses and places for 11 million users a month. On 192.com, users can search over 700 million records including free directory enquiries, edited electoral roll information, local business listings, interactive mapping, aerial photography and property reports.

Content credited to:  192.com - September 2013

Member's Area

Subscribe to mailing list

Be the first to hear the latest news and offers from Retirement Matters.