UK property landlords reveal their worse fear is rental arrears, report shows

Rental arrears are still a worry for UK property landlords despite rising demand and predictions that the sector will be buoyant in 2011.

The good news is that 2010 is ending on a high note for the buy to let industry as an increasing number of residential landlords say that they are confident in the marketplace. Findings from the December Upad Landlord Confidence Index show that 60% of residential landlords are more confident than last month, up from 54% in November.
 
Increased rental demand is the biggest reason for this rise in confidence. Amongst landlords who said they felt more confident, comments included: stronger and quality rental demand with cheaper availability to buy at super cheap prices – heaven; demand is high; interest rates are low and looking to stay low; voids are a thing of the past; there are so many tenants out there; great for landlords.
 
But of those who said they were less confident, a number mentioned increases in arrears and unpaid rent by their tenants. They reported that more tenants are defaulting, renters are beginning to default even more than usual and said they are worried about social tenants not paying again.
 
And the lack of available finance is still hampering property investors. One landlord said that residential buy to lets generally make a 30% loss per year so without capital growth it is unsustainable.
   
‘At Upad, we’ve seen tenant enquiries close to double in the second half of the year to what they were six months ago and the unprecedented growth in tenant demand should be good news for landlords,’ said Upad’s chief executive officer, James Davis.
 
‘But landlords don’t exist in a bubble. They’re held back by banks who just don’t want to lend money, and more than ever, are at the mercy of tenants who either can’t or won’t pay their rent. We can expect this situation to get worse as government cuts bite deeper,’ he explained.
 
He also warned that landlords more than ever need to be vigilant about their cash flow and ensure that if the worst happens and their tenant does stop paying that they have enough available cash to service a mortgage without their rental income.