Landlord possession actions have been increasing since Q2 2021, according to recent statistics from the Ministry of Justice comparing figures from October – December 2022 to the same quarter in the previous year.
When compared to the same quarter in 2021, landlord possession claims increased from 14,436 to 20,460 (42%), orders from 6,865 to 16,158 (135%), warrants from 4,285 to 8,717 (103%) and repossessions from 2,729 to 5,409 (98%).Mortgage and landlord possession statistics: October to December 2022 – GOV.UK (www.gov.uk)
By the end of 2022, 5,409 tenants were turned out of private rented properties, which was a marked increase compared to the same quarter in 2021. Although it cannot yet be said whether these increases will continue at the same pace through 2023, the upward trend may be indicative of the increasingly tough financial environment currently at play for both tenants and landlords.
Interest Hikes Applying Pressure to Landlords and Their Tenants
At the start of the month, the Bank of England base rate saw its tenth hike in a row, soaring to the highest level seen in 14 years – at 4%. These unprecedented increases have been affecting the industry over the last 15 months, having risen from 0.1% in December 2021. Landlords are feeling the intense pressure of the interest hikes, and tenants are struggling under the burdens of increased rent as landlords attempt to recover their costs by raising prices.
With the cost-of-living crisis adding to this, people are understandably concerned with how they can afford to pay their rent. More than 500,000 tenants are behind on their rent in the UK currently, and nearly 57% of tenants asked in a recent survey by a property firm said that they don’t believe their current rent and bills are sustainable.*
Therefore, it’s reasonable to deduce that a number of the increased incidents of landlord possession actions are in part due to tenants in arrears.
Why Possession Actions Are So Costly for Landlords
While waiting for court proceedings to regain possession of a property, 100% of the costs sit with the landlord. The recent statistics from the Ministry of Justice found that the median average time from claim to landlord repossession was 21.7 weeks.
A possession claim that is going to take five months or more to settle, could mean thousands of pounds of rent lost if the tenant is unable or unwilling to pay. With legal costs on top, the landlord will be facing a significant financial loss during the process to regain the home.
How Rent and Legal Protection can Recover Costs and Provide Peace of Mind
With an appropriate Rent and Legal Protection policy in place, landlords can have a safeguard should a tenant fail to pay their rent. The cover can pay loss of rent until the vacant possession of the property can be obtained. If the property is damaged, Rent and Legal insurance cover will cover up to two months’ rent until the property can be repaired and ready to market to a new tenant.
Having cover in place for legal expenses can be hugely beneficial to a landlord amidst these difficult times. Rent and Legal protection can cover a landlord’s full legal costs to evict the tenant and claim back any damages as well as cover defended claims against the landlord. It also includes mediation, which could be incredibly valuable for settling an eviction outside of court, eliminating the long court delays altogether.
A Small Price to Pay to Protect a Five-Figure Annual Income
The Lettings Hub offers a Landlords Rent and Legal Protection policy that gives comprehensive cover for an average £1,000 monthly rent for as little as 61p a day.
Landlords can also incorporate this cost into the monthly rent, especially as many are reviewing rents at present. It is also tax deductible, making it even better value, and there is no excess fee to pay on this policy.
Agents Can Give Confidence to Their Landlords
Amidst the cost-of-living crisis and the number of tenants in rent arrears rising, offering Rent and Legal Protection ensures that letting agents can reassure landlords who may be in two minds about exiting the market. The insurance cover is a comprehensive solution to some of the problems that the housing industry is currently facing.
Landlords Can Protect Assets Now, Ahead of Rising Financial Risks
Interest rates are predicted to continue to rise, and the cost-of-living crisis is very much in full effect at present. Making the smart decision to incept Landlords Rent and Legal Protection now, can be a sound investment to protect assets for the future.
To speak to one of our experts about Rent and Legal Protection, call us on 0345 241 0768, or to find out more visit our website here.