Credit Checks Wednesday, 25th March 2009

As the impact of the Credit Crunch reverberates through the economy the effects reach ever further, often taking individuals and companies unaware, no less an example can be found in the property letting market.

It is estimated that in 2009 there will be over 150,000 repossession claims for private sector landlords, this represents around 5% of the private rental sector. One of the key factors to avoid such a predicament is continuity of rental income, and this requires adequate checking of tenants before letting a property.

The impact of the credit crunch is going to have a severe effect on the financial situation of many people, and in particular those who have a poor credit history. We have carried out some research that we feel all landlords and letting agents should be made aware of:

In 2009 there will be an estimated 880,000 CCJs issued for non payment of debts
The actual figures are increasing from 1,990 per day in December last year to 2,430 per day in 2009. This is an increase of over 22%

In 2009 there will be an estimated 150,000 people made bankrupt / insolvent
Bankruptcies and Insolvencies will increase from 298 per day in December last year to 411 per day in 2009. This is an increase of over 37%.

For every 10 tenants checked, on average one CCJ is found
Credit-Check-Services.co.uk sampled 500 tenant reports during Q4, 2008 and found an average of 1 Count Court Judgement (CCJ) or Court Decree (CD) for every 10 tenants checked. With the projected increase in defaults we expect to see an increase in the number of tenants with CCJs awarded.

The key message for landlords is don’t become a statistic, take action to help ensure you maximise rental incomes through adequate checking of tenants. Ask yourself this question, can a landlord afford not to check tenants for County Court Judgements / Court Decrees?