Severe tenant rent arrears in the UK have risen to their highest level in two years. According to reports from the latest Tenant Arrears Tracker from estate agencies Your Move and Reeds Rains, the number of tenants who are finding themselves dangerously behind on their rent reached a staggering 74,000 in the second quarter of 2015.
This figure represents private sector tenants who have fallen more than two months behind on their rent, and is an increase of 5,000 households on the previous year.
In 2014 the figure stood at 69,000, meaning an annual increase of 7.2% in just 12 months. Equally there was a 4.4% increase in the number of tenants facing serious arrears from the previous quarter too, which stood at 70,900 before the addition of 3,100 households. Interestingly enough the report is keen to stress that although there has been substantial growth, it pales in comparison to figures in the UK’s recent history. The report points to the third quarter of 2012 when the number owing more than two months’ rent stood at 116,600 households.
What is becoming more evident is the ability of landlords to absorb this deterioration, with eviction orders now lower on both an annual and quarterly basis. In the second quarter of 2015, 27,910 tenants were faced with an eviction court order, a 5.9% reduction compared to 2014, and a 3.9% improvement compared to the previous quarter. Landlords are being urged to invest more into property, with a shortage in supply made evident in the report’s findings.
Landlords themselves have seen their own arrears improve for the eleventh consecutive quarter, with the number of buy-to-let mortgages over three months in arrears have fallen by a substantial 58% over the past 12 months and 35% since the first quarter of the year. This has led to a record low of 5,700 landlords seriously in arrears. Although figures may be low, the risk of severe arrears does still hang over landlords, with the increase in late rent payments from tenants having the potential to directly affect those they rent from. It requires patience and understanding from landlords, who may also feel vulnerable themselves.
At Orchard and Shipman we understand the risks of renting a property and the uncertainty over whether your tenant will be respectful and, ultimately, whether you will be regularly paid in full and on time. Property requires a big investment from landlords to reap rewards, which is what makes it so daunting. To help combat this we have introduced a Guaranteed Rent Policy, a bespoke package that can be added to any of the services you receive from Orchard and Shipman. What this policy does is protect your rental income, removing the uncertainty that comes each month on payment day and keeping you in pocket throughout the length of your contract with the tenant. It is one of many incentives we offer our landlords to help keep the threat of rent arrears at bay, and help make sure that their property continues to provide them with the income they desire.
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