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Unemployment among new tenants in the private rented sector has doubled over the last year, meaning it's more important than ever that landlords have protection in place to cover their backs.

Unemployment amongst UK renters has risen to 7.8%, up from just 3.1% twelve months ago, according to analysis of data on new tenancies by Smartlandlord.co.uk.

It says with over 40% of the UK's two million unemployed aged under 25 – typically a renting demographic – the private rented sector has been hit hard by the current economic downturn.

With the regular employment market in turmoil, there has also been a rise in the number of self-employed tenants, up from 7.8% to 8.4% annually; and a slow but sustained growth in the number of retirees, from 7.8% to 8.1%. Also, with many of those who have lost their jobs going back into education, the proportion of new tenants which are students has risen from 0.2% last April, to 4.1% now.

Keshav Thukaram, managing director of Smartlandlord.co.uk, warned: "With the occupation of tenants diversifying from traditional employment, landlords need to make sure they reference tenants to ascertain they can afford the property, and ask for guarantors where necessary.

"But tenant referencing is an indication of a tenant's past and current situation – it is no guarantee of the future. In the current economic environment, any tenant, whatever their employment may find themselves in financial difficulty due to some unexpected loss of income. This means landlords need to look at new ways to protect themselves, such as rent guarantee insurance and rent on time."

Talk to your mortgage adviser about what you can do about protecting your rental income. There is no way of predicting your tenants' abilities of paying their rent – and there is no way of predicting whether you will be able to pay your own mortgage. So protection is crucial now more than ever – don't leave yourself at the mercy of the recession just so you can save a few pounds a month. Get protected and get a guarantee that your investment will still be safe whatever happens.

SOURCE: Smartlandlord.co.uk, 20/04/09

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