LONDON, January 25, 2013 /PRNewswire/ --
After the recent news about the government's welfare reforms, where housing benefit will be paid to the tenant once a month instead of directly to the landlord, the National Housing Federation has said that they expect rent arrears to increase by £245m a year (a 51% increase). Compare Crazy, an insurance provider for landlord insurance and business insurance, looks at how this will affect both landlords and tenants.
The government has put in place the welfare reforms to address the demand for housing in the UK and reduce the amount of benefit to those that have a spare room in their properties. If there is one spare room the recipient loses 14% of housing benefits and if there are two spare rooms, they will lose up to 25%.
The news of housing benefits being paid directly to tenants instead of landlords has created a huge concern with people falling behind with payments, risking the home they live in and of course landlords worrying about rent being paid.
Mike Feeney head of sales at Compare Crazy, explains, "Tenants will now have to budget to avoid falling behind with their payments and there is a lot of uncertainty about the impact this will have on both tenants and landlords."
Even though for most people, budgeting is a normal thing to do it is inevitable that some people may struggle and need extra support. Both tenants and landlords need to prepare for this change so it has a minimum impact on their lives.
Mike says, "Landlords should contact their landlord insurance provider to check that they are covered with rent guarantee insurance and have a legal expenses policy, should their tenants fall behind on their rent, otherwise recovering arrears can be both difficult and costly."
It is a difficult time for both tenants and landlords and many people could lose their homes if they are behind on rent. The eviction process is something some landlords choose to avoid but for many, it's the only option should the rent arrears become severe.
Compare Crazy specialise in comparing insurance products for small business owners, offering a range of insurance products including Landlord Insurance, Motor Trade Insurance, Public Liability Insurance, Employers Liability Insurance and many other products.
Head of Sales
SOURCE Compare Crazy