http://www.telegraph.co.uk/finance/personalfinance/investing/750620...

The number of tenants unable to pay their rent rose dramatically last year, according to research.


The number of landlords claiming on insurance against non-payment of rent soared by 32pc in 2009 and by 58pc in the second half of the year, said Endsleigh, the insurer.

The company put the increase down to a deterioration in the finances of tenants, who in many cases would have begun their tenancies several years before onset of the credit
crisis.




Carlos Thompson of Endsleigh said: "The increase in landlords and lettings agents suffering defaulting tenants is a big problem in the industry at the moment.

"It is likely that many of these tenancies were taken up several years ago before the recession took effect, and what we're seeing now is that people's financial situations
have changed and they are finding themselves struggling to meet
payments that they were previously comfortable with."

By contrast, the financial security of new tenants applying for lettings contracts increased in 2009, said Endsleigh, which also offers a tenant
referencing service. Its figures showed that the proportion of declined
tenant references fell by 9 percentage points in the second half of
last year.

The most common reasons for declined tenant references in the second half of 2009 were "insufficient income to cover rent", which accounted for 25pc of the applications turned down, and
"detrimental information registered against the applicant", such as
court judgements, bankruptcies and loan consolidations (23pc), the
company said.

Mr Thompson added: "The reduction in declined tenant references last year shows that tenants are looking to rent properties that are more realistically matched to their means, rather
than stretching themselves financially during these uncertain economic
times.

"With the increase in unpaid rent, we are seeing more letting agents and landlords looking to adequately reference their prospective tenants so that they may then guarantee the rental income
against default."


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