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Buy-to-let landlords should hold reserve funds

paulajohn
Written By:
paulajohn
Posted:
Updated:
02/12/2013

Landlord Assist has urged landlords to budget for rental arrears over the festive period.

The nationwide tenant referencing and rent collection company claimed that rental arrears traditionally peak in the run-up to Christmas, as the financial strain of the season pushes tenants’ budgets to breaking point.

Landlord Assist suggests that landlords should make contingency plans for this eventuality, keeping funds in reserve to meet their buy-to-let mortgage payments, in case tenants do default on their rent.

It is also urging tenants to budget carefully for Christmas and prioritise their rent over other expenditure.

Graham Kinnear, managing director at Landlord Assist said that many households are already feeling the strain of rising living costs, stagnating wages and record rent levels.

He said that the additional strain of Christmas could leave many tenants’ finances stretched to the limit.

He said: “December is a time when we see people’s budgeting priorities change, with people keen to spend money on gifts for family and friends.

“Christmas is an expensive time of year and many people feel pressured to spend money they simply don’t have, with many also tempted to use credit cards and payday loans to cover the cost.

“In some instances this leads to an inability to meet their rental obligations and puts tenants in an unenviable position of facing arrears in the New Year. We urge tenants to budget carefully for Christmas and not risk to their homes by slipping into arrears with their landlords.”

Stephen Parry, commercial director at Landlord Assist added:

“Given the inability of some landlords to meet mortgage payments without the rent, we are worried about the demands that Christmas places on people.

“If tenants are finding it tough they should not be afraid to explain to their families if they are working on a restricted budget this year. It is surely better to have a roof over your head and be without the worry of rent arrears than to overspend on gifts and socialising with friends, which are likely to be forgotten by the New Year.

“Wherever possible, landlords should have a reserve fund available to them to cover mortgage payments during periods of non-payment or voids as well as unforeseen repairs which need to be carried out in the property. Those who are reliant on the rent to pay the mortgage each and every month are arguably spreading themselves very thinly.”


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