Landlords will need the support of letting agencies to provide guidance and ensure they have comprehensive records of all rent arrears and communications with tenants, according to PayProp.
A report by the rental payment automation platform, using payment data from letting agencies across the UK, has shown that four in five have seen the share of tenants in arrears grow since March.
Following a jump in April, the percentage of tenants in arrears has climbed to over 15%.
The average amount owed by tenants in arrears has also grown in relation to their monthly rent, although around a third of agencies actually saw arrears reduce as tenants began repaying the amount owed by them.
Neil Cobbold (pictured), chief sales officer at PayProp, said: “After an initial surge in March when COVID-19 started to spread rapidly across the UK, heightened levels of rent arrears could persist for many months to come, despite many tenants settling some of their debt.
“Measures like the furlough scheme and Universal Credit increases have helped tenants to continue paying their rent, but payments are still less predictable than usual, and the furlough scheme is almost at an end.
“It’s therefore hugely important that letting agencies are on hand to help their landlords deal with rent arrears and associated issues.”
Cobbold added that digital record-keeping by letting agencies has helped landlords stay on top of rent arrears, allowing them to see how much is owed and by which tenants.
He also said that agencies are in a position to help landlords create payment plans for tenants to pay back arrears over a manageable period of time.
Cobbold said: “Many landlords have been very flexible in agreeing temporary payment schedules with tenants in recent months.
“If all the information is recorded digitally by letting agents, this can help all parties to have a clearer understanding of their financial positions – and increase landlords’ chances of recouping unpaid rent.
“Keeping a record of all conversations and agreements made with tenants will also reduce the chances of payment disputes occurring later on.”
He added that guidance for landlords will likely be key in helping them navigate the issue of rental arrears.
Cobbold said: “Letting agents should be familiar with the types of support on offer, such as Universal Credit and the Self-Employment Income Support Scheme [SEISS], so that they can communicate them to landlords.
“It’s important that tenants who are having financial problems are advised to seek support so they can pay as much rent as possible.:
It has been predicted that there could be a surge in court cases after the moratorium on evictions ends in August, as many court possession orders were stopped in their tracks in March.
Cobbold said: “Agencies should continue to advise landlords to pursue the lengthy and expensive court process only after trying to agree repayment schedules with tenants struggling to pay rent.
“While eviction will always be the last resort, letting agents’ records of payments and agreements will also provide landlords with the evidence they need should they need to seek repossession.”