UKALA conducted a survey of Letting Agents in late November and early December 2022, in order to forecast what the Private Rented Sector might look like in 2023.
The results warn of a tough year ahead for the industry. It seems to reflect that the increasing burden on landlords amid the current financial crisis, means that there will be an impact on the availability of rental stock in the private sector.
Rising Rent Prices in 2023
Agents have given valuable insight into the rising rent prices that tenants can expect this upcoming year. Only a mere 17% of the agents asked in the survey reported no change in their rent price forecasts, and virtually none saw an outcome in which rents would fall in any region. The rest stated;
“79% of member letting agents see rents rising in 2023, 58% by up to 10% and 21% by over 10%”– UKALA
These figures are worrying, since we already know that around 2.5 million renters are either behind or struggling to pay their rent already.
Predictions for the Private Rented Sector See an Increase in Arrears
Its long been speculated that the cost-of-living crisis would have an impact on the number of tenants facing rent arrears in 2023. However, the results of the survey put this in stark reality as they show that;
“nearly 68% of respondents see rent arrears increasing next year (of which 8.5% are forecasting them to more than double)”– UKALA
Letting agents in Greater London, South East England and the South West particularly, expect to see rent arrears increase significantly due to the soaring rent prices.
The old rule-of-thumb used to be that a landlord should be able to have three months rent saved, to fall back on in the event that a tenant falls into arrears.
However, court times to gain possession of a property where a tenant has fallen into arrears, is now significantly exceeding three months. Currently, it stands at around 10-14 months.
With the rising average monthly rent and the severe delay in court proceedings, the average cost to evict a tenant in arrears is standing at £16,945.
If we were to update the ‘rule-of-thumb’ to fit the current financial crisis, a landlord would need at least £14,880 in the bank – for each property they let.
Having access to that kind of cash upfront is simply not feasible for most landlords.
Landlords React by Looking to Protect their Portfolios
As a result, many landlords are feeling the need to protect themselves from these downward-facing statistics and ensure protection of their assets and rental incomes.
“89% of agent respondents saw their landlords’ reducing portfolios in 2023 (61% slightly, and 28% significantly – by more than 10% of their housing stock)”– UKALA
Protect Your Agency’s Reputation and Landlords Assets with Effective Solutions
Protecting your landlords and developing a strong landlord proposition in a competitive agent market is going to be a strong indicator that your agency is doing something right. There are very simple things that an agency can do to ensure that they are prepared for these challenges, while at the same time providing an attractive incentive to keep landlords on board.
A good Rent and Legal Protection insurance product that protects against missed rental payments and that will cover legal funds in the event of an eviction proceeding, is an ideal investment for a landlord and agents looking to protect their portfolio and management fees.
It’s a win-win situation for all, as the agent can earn while retaining clients, and providing them with a lifeboat in a storm.
Rent and Legal Protection:
- Pays rent arrears, acting as a safeguard should a tenant fail to pay their rent.
- Legal expenses are covered if the landlord should need to evict a tenant and claim back any damages
- Cover includes mediation before pursuing eviction, which in the current climate of court delays, leads to a quicker process
- No upfront cost – Nil excess policy