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Agents and landlords warier of risky tenants as Section 21 ban looms

Data from Goodlord reveals a rise in the number of private rented sector tenants being asked for rent up-front or a guarantor.

Nigel Lewis

tenant interview

Letting agents and landlords are becoming warier of high-risk tenants ahead of the government’s looming Section 21 ‘no fault’ evictions ban, which is likely to make it more expensive and time-consuming to eject tenants who stop paying their rent.

This is one of the conclusions of research by lettings platform Goodlord, which says the ratio of agents and landlords insisting tenants pay two or more months’ rent up front has risen by 43% since the pandemic. So far this year, one in 40 landlords have made the demand.

Many of them have been traumatised by the evictions ban and courts backlog and are now wary of taking tenants who aren’t financially secure – bolstered by the supply imbalance within the housing market.

Goodlord looked at 730,000 tenancies over the last four years and also found a 36% rise in the number of non-student tenants being asked to provide a guarantor, with the biggest jump seen in 2020.

Guarantor rise

The biggest increase was in the West Midlands, where 14.9% of non-student tenants were asked to provide a guarantor, up from 6%. During the same period, requests for guarantors for student tenants have remained relatively stable.

The lettings platform says as more tenants are spending a greater proportion of their salaries on rent and stretching their budgets in order to secure properties with spare rooms or gardens, landlords want additional assurances during the referencing process.

nathan emerson tenant referencing“Not only have tenants faced financial difficulties, but it’s important to remember that many landlords will have as well – considering that 54% of landlords have buy-to-let mortgages and nearly half of all landlords have only one property,” says Nathan Emerson, CEO of Propertymark (pictured).

“Even before the pandemic, changing legislation and the onset of tax changes have impacted landlords’ costs, so it’s not surprising that we are seeing a rise in landlords requesting rental guarantors to give a greater level of protection should a tenant fall into arrears or default on the tenancy agreement.”

Read more about referencing tech.

February 14, 2022

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