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Rising rents pose potential risks

publication date: May 27, 2010
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property drumAs a RICS residential lettings survey revealed that more agents expect rents to rise over the next three months, landlords are urged to rigorously vet tenants before handing over the keys. 33 per cent believe rents will rise over the coming quarter compared to 22 per cent last quarter.

Similarly FindaProperty’s Rental Index for March revealed rents rose for the second consecutive month and are now £16 pcm higher than in January at £820 pcm. The firming of rents is underpinned by reduced availability of rental properties on the market, now at the lowest level since October 2008.

HomeLet MD John Boyle says the increase in rents should increase yields and bring more people into the buy-to-let sector, alleviating the shortage in rental properties. However increases in rents could cause problems for landlords down the line.

“If rental prices continue to increase owing to the decline in supply, people looking to rent may not be able to afford to do so or may struggle to make their payments,” said John Boyle. “Tenant referencing is a crucial area that is often neglected. Yet it can be the single most significant factor in protecting letting agents and landlords from tenants who can’t or won’t pay the rent.”