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Tenant arrears rose by almost a quarter in August as 8,000 more tenants failed to pay their rent – a warning to all UK landlords trying to keep their investment running through this deep recession.

According to LSL Property Services, while rents rose by 8.2% over last three months, tenant arrears showed a 24% increase in August to £307m as additional 80,000 tenants fell behind with their rent. Latest figures from the Office of National Statistics say that nearly 2.5 million people are now out of work in England and Wales, meaning this tenant arrears problem could continue to rise into 2010.

David Brown, commercial director of LSL property services says: “Sharply lower supply of rental housing, strong tenant demand and greater confidence among landlords are pushing rents sharply higher. A resurgent rental market is a strong sign the recession is over – regular landlords no longer facing this cut-price competition are able to charge a higher price for their properties.”

Of course, if your occupying tenant cannot pay their rent then it doesn't matter if rents are on the rise. The only way to make sure that you don't become a victim of the unemployment boom is to not only create a dialogue with your tenant but to also to get some rental cover. By talking to your tenant regularly you can come to an arrangement if they can't afford to cover their whole rent, which could help both of you. Alternatively, if they can't pay anything, good rental cover will make sure your buy to let mortgage is safe.

Brown says: "Those with a diversified portfolio of property who do their homework and seek out the properties which appeal best to the rental market can expect to make good returns. Buy to let is not for the speculator; it is not a licence to print money. It is a long-term business proposition that needs expertise."

If you want to maker sure your investment is for the long-term, get some cover. No one can stop unemployment rising, but they can protect themselves from the fallout.

SOURCE: ONS, 16/09/09, LSL, 28/09/09

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