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Soaring rents seeing more tenants falling into serious rent arrears

30th December 2011

Although landlords have been enjoying soaring rents over recent months, this is having an adverse effect on tenants' ability to keep up with payments, new data shows.

According to the latest figures from chartered surveyors Templeton LPA, there are currently 78,970 tenants in England and Wales who are in severe arrears with their rent - meaning they are at least two months behind on payments.

This is nearly 11,400 more people than at the same time last year.

However, while instances of severe arrears are rising, total arrears levels are actually falling, with just 9.3 per cent of all rent going late or unpaid in November.

Templeton's Paul Jardine claimed that this suggests a "two-speed" market has developed, as a result of soaring rents.

"The overall tenant population has coped relatively well with rising rents and soaring living costs - with total arrears actually down year on year in November," he said.

"But a growing minority of renters are falling deeper and deeper into payment difficulties, and the number of severe arrears cases is rising."

Meanwhile, the number of tenants being evicted through court orders is also increasing, with 24,966 people served eviction notices in the last quarter of 2011, 11 per cent more than a year ago.

Mr Jardine added: "Given the economic challenges the UK faces, and the worsening labour market, we anticipate that both overall arrears and severe arrears will rise in 2012 - and this will feed into increased tenant evictions and hamper a growing number of landlords' ability to meet their monthly mortgage costs."

Landlords keen to avoid being the victims of unpaid rent may want to consider using tenant referencing services which will be able to verify a perspective tenant's financial circumstances and employment status - giving the landlord a better indication of how likely they are to be able to keep up with rent payments.

This could also reduce the chances of the property owner having to make a claim on their landlord buildings insurance for damaged caused by the tenant as referencing services will uncover any history of their mistreating a property.

Meanwhile, taking out rent guarantee insurance will help the landlord recover their lost income should a tenant default on payments.

Posted by Heather Thomas

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