Buy To Let Landlords Warned on Defaulting Tenants

A report on the My Finances website warns that buy to let landlords face problems with defaulting tenants.

As if it weren't bad enough with rising interest costs and fewer tenants, it seems that rising unemployment will mean more tenants unable or unwilling to pay rent. Particularly vulnerable will be first time landlords, unused to recognising a good covenant from a poor one when finding a tenant. Many lettings agents collect their fees for a year - or longer - in advance. This can encourage less scrupulous negotiaters and agencies to overlook potential shortcomings in a prospective tenant's profile and suitablity to rent.

We collect our fees quarterly, where we collect rent, and have every incentive therefore to look for tenants likely to pay on time. We don't have a crystal ball however, and sometimes tenants will be unable to pay rent for reasons often beyond their control.

Specialist insurers exist to indemnify landlords against non-performing tenants, but as for most things in life, prevention is better than cure!