Economists, statisticians, and forecasters are being vindicated again and again after predictions of hard times for citizens living in urban cities during the end of the recession. Everybody seems to be affected one way or the other; even landlords with high valued properties are not insulated from this trend.
Problem 1: More tenants are offsetting rent with credit cards. More and more tenants are finding it difficult to put food on the table, pay their kids’ school fees, and pay the rent at the same time. A clever method is now to use credit card funds to settle the rent. This is quite dangerous and leaves the landlord at a disadvantage. Tenants under stringent financial pressure are more or less using one form of debt to cover another putting the landlord at risk when the time to settle the mortgage arrives.
Suggested Course of Action: Landlords should take precautionary measures to protect their business interests by reducing the likelihood of being exposed to arrears by referencing prospective tenants and consider additional protection via a rent guarantee policy to safeguard them in the event that their tenant loses their job or suffers any other major change in their financial circumstances
Problem 2: Rogue Letting Agents’ Frauds. Letting agents are smiling to the banks at the expense of the landlords providing the properties for tenants. These agents collect money from tenants and keep it to themselves until such a time when they can no longer hold unto the funds. This has effectively turned landlords into “debt collecting agents” because the law does not state clearly how to retrieve these funds.
Suggested Course of Action: Landlords should be very wary of whom they appoint as rent collecting agents for their properties and ensure they and the agents sign legally binding agreements regarding rent collection and remittance.
