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TODAY'S OTHER NEWS

Agents warned of growing arrears if wider economy doesn't improve

Letting agents and landlords have been warned to expect a possible rise in arrears in the coming months if conditions in the wider economy do not improve. 

RentalStep, a PropTech start-up, warns that if rents continue to rise and wage growth remains stagnant, arrears could grow. 

The company, which specialises in tenant referencing and associated services, says its concern is growing following recent data releases from agencies.

According to Your Move, the number of tenants in arrears increased for four consecutive months between January and April, with the proportion of its tenants in arrears up from 8.4 to 9.4 per cent during this time; meanwhile, Belvoir recently reported that a fifth of its offices had four to 10 tenants in arrears during the first three months of the year.

"Rent arrears are a real and serious issue for the nation's landlords and they need to do everything in their power to protect themselves from being seriously affected" says Mike Georgeson, founder and chief executive of RentalStep.

"Many industry commentators predict that rents could rise as a result of the incoming ban on tenant fees. Landlords need to be aware of how this could impact on rent arrears and prepare accordingly. Making sure you let to tenants who have been fully referenced and credit checked is absolutely vital" adds Georgeson.

He says it has been estimated that rent arrears collectively cost landlords somewhere in the region of £900 million each year. 

As tougher conditions and increasing regulation start to affect landlords and agents, the number of tenants in arrears could continue to increase throughout the year, particularly if rents keep rising.

RentalStep is one of the startups competing in the government’s Rent Recognition Challenge which was launched to encourage digital solutions to help share renters' payment histories with lenders and credit reference agencies.

After being named one of six winners of the first stage of the competition, RentalStep recently took part in round two by pitching to the Treasury. A total of £1.4m will be made available to the winners of the competition to develop their product. 

"Making it a formality for rent payments to be included in credit scores is key to securing the financial future of the next generation" concludes Georgeson.

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