What can a landlord do when a tenant stops paying their rent?

that rental demand has increased by 15%. Despite this increase demand is still outstripping supply and according to their research an average of 5 people are competing for every one property.

With unemployment at around 8% (National Statistics Office, June 2011), banks enforcing strict lending criteria and general economic uncertainty, it is not surprising that demand for rental property is high. First time buyers can no longer benefit from 100% mortgages to purchase their properties, which leaves very little to inspire confidence. Ever-increasing living costs and spiralling inflation are added factors that cannot be ignored either. With new government initiatives only helping a small percentage of first-time buyers it is obvious why so many will have to rent for longer than planned.

This has left landlords with a positive outlook towards their investment properties with many of the cash-rich continuing to grow their portfolios. The demand for landlord insurance has therefore increased in recent years.

However, the life of a landlord is not always as easy as one may think. There are many reasons why problems might occur during a tenancy. One of the most common issues is tenants not paying their rent. Perhaps a perfectly good tenant might have lost their job and is finding it hard to pay the rent or a couple have split up half way through their tenancy agreement. In other circumstances, it’s fair to say that there are some tenants that were always going to be a problem no matter what.

When a tenant stops paying their rent they are not only in breach of their contract but they start to cause the landlord un-needed stress, mainly because chasing rent soon becomes a time-consuming process and the landlord may start to face financial difficulties. If this happens then the landlord should first write to the tenant and ask them to discuss the situation. The landlord should always try and resolve any issue with the tenant amicably, although clearly this isn’t always possible.

In many cases, the landlord may decide to terminate the tenancy agreement altogether. In such a scenario, a notice is served and then the court takes possession and finally ends the contract. This should be a last resort especially in cases where the financial difficulty may be a temporary one, such as the tenant losing a job etc. The landlord should try to offer and accept other modes of payment such as negotiating part payment terms for a temporary period until the tenant is able to find a new job etc. However, there may be cases where the financial situation of a tenant has changed drastically and receiving the arrears for the rent might not seem possible. In such cases, it is best for the landlord to ask a court of law to intervene and re-gain possession of their property so that they can let it out to a new tenant to avoid further losses. Because of the potential issues that may arise it is always advised that a landlord should speak with an insurance brokers about special cover that includes legal expenses and rent guarantee.

Tags: supply, positive outlook, small percentage, financial difficulties, property, confidence, court, investment

Insurance can play ‘important role’ in protecting finances

Insurance can play an important role in helping consumer meet their financial commitments, one expert has claimed.

The Association of British Insurers (ABI) has said that taking out insurance can significantly improve a situation when household experiences financial difficulties due to unemployment, illness or loss of life.

Nick Starling, the ABI’s Director of General Insurance and Health said: “It is important when people are taking out a loan or a mortgage that they think about how they would meet repayments should they fall ill or become unemployed.”

Statistics show that 23 per cent of people will be jobless at one stage in their lives while more than one in three could be out of work for more than a year.

The most vulnerable groups who have no insurance or coping strategies in place include single income families, single parent families, larger families and single women aged between 18 and 35.

Meanwhile, earlier in the month the ABI has made a commitment to ensure claims are assessed fairly and paid “without fuss”.

Tags: Insurance, single income families, financial difficulties, Association, commitment, director

Homeowners warned about fixed-rate deadline

Mortgage holders are being encouraged to plan ahead if they are due to reach the end of their fixed-rate deals in the coming months.

The Council of Mortgage Lenders (CML) says that around 1.3 million people took out a fixed-rate deal in 2005, while a further 1.5 million did the same in 2006.

Most would have had just a one or two-year period of paying a fixed rate and the CML is warning that borrowers must be prepared to start paying increased levels of interest.

According to the CML, the average borrower will face a rate increase of between 0.75 per cent and 1.5 per cent.

This could potentially have a devastating effect on many homeowners and, although the Bank of England has chosen to freeze interest rates at 5.5 per cent in June, rates are likely to increase further in the coming months.

“While today’s [June 7th's] decision not to raise rates is welcome, there is no cause for complacency. More than two million borrowers over the next year and a half will reach the end of fixed-rate deals, and will face the prospect of higher mortgage payments,” commented Michael Coogan, director general at the CML.

“For most people, the scale of the increase will be manageable. But it makes sense for borrowers whose fixed-rates will end soon to start planning ahead now and to recognise that their monthly costs will be higher in the future.

“Anyone who thinks they may face financial difficulties should talk to their lender at an early stage to see what steps can be taken to improve their situation,” he added.

Tags: rates, recognise, financial difficulties, increase, half

Start saving early, warns Saga

Young people are being encouraged to start banking their pensions early or risk a tough time when they hit retirement.

Over-50s advisor Saga says that youngsters should be putting money aside as soon as possible by using tax-efficient savings tools and watch what they spend.

Spokesperson Steve Ashton said the sooner people begin saving their money for retirement, the less pressure they will have on them to put cash away in later in life.

He added that it would leave people less likely to get into financial difficulties, such as having to re-mortgage their home.

“Everybody ought to every year be trying to put as much money as possible into the basic tax-efficient savings vehicles, such as your annual ISA allowance,” he said.

“[It's] all very straightforward stuff, but if you are putting a few thousand pounds every year for a number of years into an ISA, then that over ten, twenty years can really start to ramp up and make a significant difference to your retirement income.”

Tags: time, cash, financial difficulties, individual savings account, Business Finance, saga, sooner people, youngsters