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Landlords see parallels with home ownership crisis

November 7th, 2011

With the lettings sector in such rude health, not every landlord with insurance for rented property is likely to be considering the implications of a downside to the sector.

But perhaps they should – if only to stay cautious about the future.

The private rental sector is, of course, booming like never before – fuelled by the economic downturn that is preventing hundreds of thousands of people from buying their own home.
The market for buying and selling is flatlining and landlords are the primary beneficiaries – yet it is not all that long since the house purchase market was itself in rude health.

And herein lies a cautionary tale: Homeless charity Shelter estimates that 35,000 people could lose their home in the run up to Christmas.

Such is the state of the economy that for many people – despite the current low interest rates – it only takes a single event such as job loss or divorce, before personal finances start to unravel quickly.

For home owners this often means missed mortgage payments – and for landlords this means tenants not paying their rent due.

When this happens, it can lead to serious financial problems for landlords.

With unemployment rising and the economy still in crisis, perhaps the Shelter figures should also serve as a warning to landlords and give them an incentive to make sure they are protected by rent guarantee insurance.

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