When letting to a new tenant, checking the tenant’s employment status and income to ensure they pass basic affordability checks is a key part of the rental process.
Ongoing research shows that many tenants have no financial resources, should they lose their jobs, encounter a life event such as accident, illness, bereavement or job loss.
A recent poll of tenants by Scottish Widows found 30% of private renters admitted they struggle financially if their household lost its main income, worryingly just 16% had life cover in place and only 3% had critical illness protection.
Of that survey, 35% conceded that if they or their partner were unable to work for six months or more due to a life event, they’d find it impossible to live on a single income.
Arranging financial protection was way down the list of renters’ priorities, with 80% seeing a mobile phone as essential, yet only 28% think the same about providing security for their family in case the worst should happen. Worryingly just 21% think that providing security for their family should they become too ill to work is a necessity.
These insights, combined with data from Lloyds Bank, that the ratio between average city house prices and average gross local earnings is at its worst level since 2008, means that a lot of tenants particularly those renting in city centres, might be just about managing to pay their rent each month.
The data from Lloyds revealed that over the past five years, the average UK city house price has risen by 32% from £169,966 in 2013 to its highest ever level of £224,926 in 2018.
In comparison, average city annual earnings over the same period have risen by only seven percent to £32,796.
As a result, average affordability in the nation’s cities has worsened with house prices rising as a multiple of average annual earnings from 5.5 in 2013 to 6.9 in 2018.
Affordability in UK cities is, on average, now at its worst level since 2008 when the ratio of average house price to earnings stood at 7.2.
The North/South divide comes in to this as well, with the South being more expensive than the North.
This data is crucial from a landlords perspective, because it shows how easily tenants can fall behind with rent should something happen that prevents them making payment. If they are already struggling financially and have no nest egg tucked away, then their ability to pay the rent could be doomed to failure.
These are just two of numerous reasons why our 3-5 years of guaranteed rent service has remained popular with landlords since 2009.
We offer 3-5 years of guaranteed rent under a lease contract and add the property to our serviced accommodation range. We will also take care of all the ongoing associated costs with renting property so you can rest assured knowing your investment is being looked after.
Our Guaranteed Rent service does what it says on the tin. We will also be responsible for all the ongoing bills, certifications and licensing of your property. We will manage and complete monthly inspections to ensure the high standards for our clients.
Other rent guarantee schemes rent your property out to other tenants that you have no control over and make them responsible for the bills and charges increasing your risk.
At Rent My Home Today we are your tenants and we are responsible for all the bills limiting your risk.
We are waiting to speak to you, contact us below so we can be your tenants!