Research released on 20^th April, 2009 revealed a rise in unemployment among new tenants from 3.1% to 7.8% in last twelve months. The private rented sector has been hit the hardest under the current economic recession. Landlords are therefore warned by this trend.

According to the First Release of Office for National Statistics (March 2009), the unemployment rate in general has been increasing drastically since the second quarter of last year; whereas the number of job vacancies has dropped by 203,000 in Feb, 2009 compared to the previous year (See graphs below). These statistics in employment are vastly anticipated by the commentators under the economic downturn.

Unemployemt Graph

Source: First Release by Office for National Statistics in March, 2009

While working people are suffering from redundancy, landlords are also threatened by this trend. Reports suggest 7.8% unemployment among new tenants, up from 3.1% compared to the previous year. Despite the usual large intake of student tenants at the peak of July and August, reports showed that many professionals moved back to studies under this economic crisis resulting a sharp rise in student tenants from 0.2% in April 2008 to 4.1% same period this year.

Considering the increase in unemployed tenants and professional tenants turning into students, landlords are now in a higher risk of rental arrears. Landlords were urged to take a complete full tenant referencing to secure themselves.

Here are some suggestions in preventing and reducing the risks landlords face:

1. Purchasing rent guarantee insurance that covers landlords when tenants cannot afford to pay their rent.
2. Even though the insurance premium may be higher, landlords are now called to take in DSS council tenants, so as to be secured and favourable from the benefits and regular income they get from the council.
3. Ask for guarantors when looking into references, which may provide a security when tenants are encountering difficulty to pay the rent.

Landlords should protect themselves from tenants’ rental arrears due to the causes of high unemployment rate under economic recession. It is important for them to know their rights and methods on how to tackle and prevent the risk arising from the unemployment of tenants. All in all, the best way to reduce the risk is to obtain rent guarantee insurance and other possible advice from the insurers.

Get a landlords insurance quote or rent guarantee insurance  today from Discount Landlord Insurance.