The New Year has started and the newspapers are already speculating on how many jobs will be lost in the coming year. Headlines such as the following are grabbing readers’ attention:
‘600,000 people to lose their jobs in 2009’
‘One in ten people to lose their jobs in 2009’
‘One person every 56 seconds will lose their job in 2009’
Indeed, it is a worrying time for all with challenging times ahead for landlords.
If the statistics are true then there is a strong chance that the vast majority of landlords will face defaulting tenants, tenants who leave properties after a very short stay or tenants struggling to pay their rent.
I always say that our tenants are going to determine how much cashflow we make from our properties. Therefore, the way in which we deal with these challenges will dictate what success we have both in the short and long-term.
I think the most important factor to our success this year is to keep tenants in our properties, and have them paying rent that is close to market rent as possible. By all means you should be charging market rent, but if tenants lose their jobs or start to struggle with payments then you need to put a payment plan into action asap.
If you want to keep the tenant in your property then offering some kind of temporary rent adjustment (if you can afford it) should certainly be considered, but it should be monitored strictly with any arrears being repaid back. If the tenant defaults on any agreed payment plan then they need to be told that they need to start looking for alternative accommodation, and any arrears will be taken from their deposit.
