Let’s face it, times are tough. The spectre of recession, coupled with the cost-of-living crisis, makes it more important than ever for landlords, estate agents and other property management firms to shore up their finances.
Increasingly, tenants are struggling to pay their rent on time, which in turn risks firms failing to pay their own employees and suppliers on time.
It’s a downward spiral that is showing no signs of slowing its descent. So, how do we stop it?
First, landlords must regain control of their finances by having an in-depth understanding of the rent owed, by whom it is owed and by when it must be paid. It’s also important to know when your bills are due so you can balance out your incomings with your outgoings.
Once you have visibility of your expected transactions, you can start to build a picture of how full your cash ‘pot’ is likely to be at any one time. By forecasting where you are likely to be in the next six to 12 months, you can pre-plan and avoid constant firefighting.
Landlords and property managers have worked hard to accumulate the capital required
to build their property portfolios and they should be able to operate in conditions that allow them to make a financial return, without fearing that rental fees won’t be paid each month.
The average renter in the UK is currently paying £969 per month, which accounts for 37% of gross income for a single earner. When you consider the rising costs of food and energy bills, people’s everyday lives are being restricted and it is clear that there is a need for change.
Support is available, but is being significantly underused. In times of economic hardship, landlords must ensure they understand the impact on their cashflow, giving them the agility to overcome any late payments that may otherwise harm their own financial position.
Ben Gillen, co-founder, Monspire