It’s also been a tough time for tenants. Many will be struggling with increased costs and probably falling incomes and, through factors such as disability or ill health, that could get worse. For landlords and lettings agents who want to do something to help protect their tenants financially, there are options available.
Roger Morris, Group Distribution Director of the OSB Group but commenting as a private landlord said: “From a landlord perspective, it makes sense to be interested in your tenants’ wellbeing. Not only to provide support at difficult times, but also as it’s tied into their ability to pay and to care for the property and, if you’re a letting agent, centres around the ‘Treating Customers Fairly’ principles. It would come as no surprise to see vulnerability among renters increase over the next few years, so it would be beneficial for landlords and lettings agents to pay attention to the various ways and means they can protect both themselves and support their tenants.”
According to the Building Financial Resilience report*, around a fifth of British households now live in privately rented housing and ONS data** shows private renters spend an average of 33% of their income on rental payments. Affordability amongst renters - who are often on lower incomes than buyers - can be difficult, which in turn, puts their landlords at risk from arrears.
Protecting a renter’s income
So, it is in the interests of landlords for their tenants to be financially protected. For some of the difficult situations that renters can face, like unemployment, there is not much that can be done to offset it by landlords. However, one form of help that is available is to cover a tenant’s income if they can no longer earn a salary due to ill health or injury – Income Protection policies, and there are some specifically designed for renters. This insurance doesn’t cover unemployment, but it can replace a policyholder’s income for any illness or disability that stops them from working - from an accident to a back injury or mental health conditions or cancer. And it can pay out potentially until retirement.
So how can landlords help? Our recent research with financial advisers and letting agents*** shows there is a significant appetite among advisers to partner with landlords and letting agents in order to get renters covered financially.
It also found that both landlords and advisers believe renters should be at least made aware of Income Protection products, but landlords don’t want to bring the topic up because it’s too technical, while advisers don’t have a way of reaching renters directly.
Landlords are willing to talk to clients and they believe they could get interest from around 50% or more of renters if advisers would take over the complex stuff, while lettings agents are happy to be an introducer. One interviewee felt conversions would be c20-30%. They estimate that typically, around 20-30% of tenants purchase a sell-on product from a Lettings Agent.
Advisers and landlords working together
So, a partnership between landlords and advisers makes sense. The landlords we spoke to have suggested some sort of incentive or referral scheme, which seems to make sense if it benefits all parties – tenants, landlords, advisers – and they felt there was a strong case to have a product aimed directly at tenants.
There is a great opportunity here to help renters avoid rent arrears if they can’t earn a salary because of ill health or disability. Products such as Renters Income Protection already exist, and we are working to bring landlords and advisers closer together. We just need to get all parties talking and everyone can benefit.
References:
* Building Financial Resilience Report
** ONS report
*** Rental Income Protection Research - conducted by Savanta for Legal & General. Included 16 in-depth interviews with advisers and 15 interviews with letting agents between 22nd October and 17th November
