Serious rent arrears up 13.8%

Serious rent arrears up 13.8%

According to the latest Tenant Arrears Tracker by estate agency chains Your Move and Reeds Rains, the number of tenants seriously behind on rent has risen by 13.8% on a quarterly basis.

There are now 84,200 tenants more than two months behind with paying their rent, as of Q3 2015, compared to 74,000 in the second quarter. In absolute terms this represents a quarterly increase of 10,200 additional households in potentially serious financial difficulties. On an annual basis, this means 13,200 more households are in significant arrears than a year ago, or an annual increase of 18.6% since Q3 2014, when this figure previously stood at 71,000 across the UK.

On a historical basis, the latest deterioration in serious tenant arrears remains relatively mild, remaining considerably below the record 116,600 such cases seen in Q3 2012. However the latest figures for Q3 2015 represent the highest levels in more than two years.

In part, the increase in absolute numbers of serious arrears due to the overall growth in the size of the UK private rented sector. As a proportion of all private tenancies, just 1.6% are in serious arrears of more than two months, as of Q3 2015. This compares to a peak proportion of 2.9% of tenants in Q1 2008. However this proportion has also increased marginally from 1.4% in serious arrears as of Q2 2015.

Adrian Gill, director of estate agents Your Move and Reeds Rains, comments: “The chance of an individual tenant falling into serious arrears remains very low. 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.

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.”


Eviction rates yet to mirror higher levels of serious rent arrears

In the same quarter of Q3 2015, there were a total of 26,712 court orders for the eviction of tenants, on a seasonally adjusted basis. This is 4.3% lower than was seen in Q2, when seasonally adjusted eviction orders stood at 27,909, and 7.8% fewer evictions than 28,959 a year before in Q3 2014.

Landlord finances stabilise with lower arrears than in 2007

Breaking eleven previous consecutive quarters of improvement, landlords’ own finances have remained in stable health between Q2 and Q3. In the latest figures there are currently 5,700 cases of buy-to-let mortgage arrears, the same level as was seen in the previous quarter. On an annual basis, this represents less than half the 12,500 cases of buy-to-let mortgage arrears seen in Q3 2014, or a drop of 54.4% over the last four quarters.

Adrian Gill concludes: “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.

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.”

Join our mailing list:

Leave a comment



Latest Comments

Jimmy_McCoy
Jimmy_McCoy 16 Sep 2016

I think that the main reason to buy garden purchases in last minute is because people always search for the best deal. In summer months there are abundance of seasonal goods and it means more low cost

view article
Jimmy_McCoy
Jimmy_McCoy 16 Sep 2016

Buying a home often is more expensive than you expect. There are lots of hidden costs such as: stamp duty, surveys and valuations, mortgages etc. that can add more than 10% to the total bill

view article
Homebuyerconveyancing
Homebuyerconveyancing 15 Sep 2016

We are seeing a massive influx of Homebuyers using online Estate Agents. The winners are the online portals that still aim to manage the customer journey to homeownership. They provide a valuation service,...

view article
oliviaG
oliviaG 12 Sep 2016

Without a doubt renovating can truly be very beneficial to many homeowners but it depends to a great extent on the condition of your home and the parts of it you want to refresh. Before you start you should...

view article
oliviaG
oliviaG 29 Aug 2016

So true about cats!

view article
Jason Roberts
Jason Roberts 25 Aug 2016

Any predictions what average rent will be at the same time next year, anymore drops coming?

view article
dylanvan
dylanvan 19 Aug 2016

very good, thanks for sharing

view article
SecomTech
SecomTech 19 Aug 2016

Firstly, I either lodge with DPS or do not take a deposit...secondly, If a tenant has not received a confirmation their deposit is secured with either a scheme or in an insured account with an agent/landlord,...

view article
jasonevans
jasonevans 19 Aug 2016

Belvoir has over 15 years of experience in property lettings, buying and renting and is one of the best agencies I know about. I have heard that they revived an award for the hard work. Really amazing...

view article
jasonevans
jasonevans 19 Aug 2016

Usually these areas are least affected when it comes to unexpected economical collapse.

view article
TheWaspNestRemover
TheWaspNestRemover 11 Aug 2016

You agree to pay for the treatment needed to get rid of fleas, ants, mice, wasps nests and other pests unless you can prove that these are a result of us not meeting our repairing responsibilities or these...

view article
madisonwelch80
madisonwelch80 02 Aug 2016

16% is quite a raise. Let's hope this tendency won't continue for long.

view article

Related stories

More articles from Landlords

Specialist Lending Roadshow 2016

20th-23rd September

4 days
7 specialists
4 locations
Free to attend

Click here to register now