Inflation rate surge – what does this mean for landlords?

November 21, 2012

Landlords Insurance

At the time of writing, news reports* are confirming a large and largely unexpected increase in the rate of inflation.

This is being attributed to a number of factors but whatever the causes are, it mightbe news that concerns all of us – including landlords.

At first glance, it might not be immediately apparent why this should be an issue for a typical letting situation but in fact it is.

Unfortunately, not only has the inflation rate surged but there continues to be associated confirmation that it is outstripping people’s increase in income.  To put it in the sort of simple language that economists often dislike, people on average are getting poorer.

Now this is of course significant for landlords.  Tenants are subject to these financial and economic pressures just the same as everyone else.  It is not therefore beyond the realms of possibility that increases in the inflation rate might be matched by corresponding increases in tenants slipping into arrears with their rent.

It is very difficult to interpret recent rent arrears statistics, as the picture has fluctuated so much over the past few years.  What is clear is that it continues to be a significant headache for many landlords and anything that suggests tenants might, on average, be getting poorer is likely to be perceived by their landlords as bad news.

There may be little or nothing that the typical landlord can do to affect the macroeconomic position.  Many are already aware of the income and cost pressures on their tenants and are doing everything possible to constrain rent increases to manageable levels.

Inevitably, a landlord is also affected by rising prices just as everybody is and may be under intense pressure to try and recover those increases from their tenants.

Perhaps this vicious cycle can be weakened by landlords increasingly trying to manage down their costs and pass on those savings through reduced rent increases etc. One obvious target must be insurance and it might be even more appropriate to look for a cheap landlords insurance quote now than it has been previously.

As is always the case with cheap insurance discussions, it is worth stating that it might be prudent to avoid looking for the lowest cost cover possible.  Remember that what might prove to be far more important to you ultimately is the nature of the cover provided by the policy.

So, those early green shoots of economic recovery continue to look to be fragile but at least they are there.  The government will be hoping that today’s news is nothing more than a statistical blip in what had been looking like some relatively positive trends over recent months.




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