A concerning new report has indicated that the numbers of tenants in significant rental arrears has risen significantly during the third quarter of the year.
The latest Tenant Arrears Tracker from estate agency pairing Your Move and Reeds Rains indicates that the number of tenants behind on rent has increased by 13.8% in the three-month period.
Behind
According to the report, there are now 84,200 tenants in excess of two months behind with rental payments, in comparison to 74,000 in the second quarter. Annually, this represents a rise of 13,2000 households, or 18.6% from the same period in 2014.
Historically however, the latest drop in arrears remains fairly mild and a long way below the 116,600 recorded in the second quarter of 2012. Worryingly, the figures for quarter three of 2015 represent the highest levels in more than two years.
Adrian Gill, director of estate agents Your Move and Reeds Rains, notes, ‘the chance of an individual tenant falling into serious arrears remains very low.’ He believes that, ‘in general, renting works for most people. Over the last decade the private rented sector has expanded at an unprecedented pace, providing homes for millions of households at the same time as absorbing the worst financial crisis in living memory.’[1]
‘In the current climate, optimism feels increasingly reasonable. Most households are beginning to earn more, the cost of living is stable and the chance of falling into unemployment is diminishing. For the majority of tenants, paying the rent is becoming easier rather than harder. But beneath this rising tide there are inevitably some households and individuals who are not yet feeling any new economic buoyancy. As others bid rents higher there will be a minority who are still struggling to keep up. Landlords and tenants have a mutual responsibility to be aware of this small but significant risk,’ Gill continued.[1]
Serious rental arrears up by 13.8%
Evictions
Higher levels of serious rent arrears are yet to be mirrored by rates of eviction. The Tenant Arrears Tracker shows that in the third quarter of 2015, there were 26,712 court order regarding the eviction of tenants. This was 4.3% less than in the second quarter of the year, where eviction orders totalled 27,909.
In addition, there were 7.8% fewer evictions than at the same time in 2014, where the total stood at 28,959.
Gill continued by saying, ‘landlords and buy-to-let lending have been targeted from a variety of angles in 2015-under a harsh political spotlight, subject to new taxes and freshly scrutinised by regulators. There could be a real debate about the role of landlords and indeed the urgent need for more investment to keep up for demand for homes to rent. However this should be done constructively-and any worriers about the financial health of landlords should consider the reality of buy-to-let mortgage arrears at record lows.’[1]
‘In the context of resurgent tenant arrears, landlords are the buffer delaying a parallel peak in evictions. And healthy landlord finances make that tolerant approach more likely. So while penalising landlords may win easy political points, making investment in new homes to let harder could be counterproductive-especially in the face of new challenges,’ he concluded.[1]
[1] http://www.propertyreporter.co.uk/landlords/serious-rent-arrears-up-138.html