Tenant arrears improves year on year

Nia Williams

November 7, 2014

In absolute terms those more than two months behind on their rent now number just 65,200. This compares to 71,700 tenants at least two months in arrears in the same period last year or an annual improvement of 6,500 households who no longer face the potential threat of losing their home.

As a proportion of all tenants, those in serious arrears of more than two months have also improved, standing at 1.4% in Q3 2014 compared to 1.6% of all tenants in Q3 2013. This means 98.6% of tenants in the private rented sector now avoid falling into significant rental arrears.

David Newnes, director of estate agents Your Move and Reeds Rains, said: “The private rented sector has mustered enough new capacity to meet, in part, the growing demand for affordable housing, through the greatest economic depression in modern times.

“This isn’t just about those relatively prosperous households forced to put ownership plans temporarily on hold. For many thousands of others, with far tougher monthly budgets, private tenancies have also provided a lifeline.

“For many renting is now their chosen route as it provides flexibility and mobility. Gradual rent rises, on a par with inflation, have helped

“ But now a bigger turnaround appears to have happened. For many years more momentary cases of rent arrears have been in decline yet it’s only recently that the most serious cases – where families could actually lose their homes – are following suit.”

Considerably improved tenant finances have now started to be reflected in eviction rates. In the latest data, 27,700 tenants faced a court order for eviction – down by 16% compared to just three months earlier when the number of tenants potentially facing eviction stood at 33,000.

On an annual basis, this leaves the number of eviction orders 0.5% lower than in Q3 2013 – representing the first time eviction rates have fallen on an annual basis since Q2 2010.

Meanwhile, landlords have also benefited from healthier tenant finances. The total number of buy-to-let mortgages over three months in arrears is now at almost the same level as was seen before the UK entered recession.

As of Q2 2014, this figure stood at 13,400, compared to 13,300 in Q2 2008. This is 8.8% lower than the 14,700 such cases in the first quarter, while on an annual basis buy-to-let mortgages in arrears have improved by 25.1%, down from 17,900 in arrears of more than 3 months in Q2 2013.

Newnes concluded: “Plenty of landlords have had their own financial problems but after astonishingly steady progress these issues have almost entirely been consigned to the past.

“This isn’t just good news for those with an investment property to support their pension plans. When landlords have a healthier cash flow tenants are less likely to see rapid rises in market rents.

“There are also more new homes coming onto the lettings market now as the era of landlords struggling with their mortgages seems to be behind us, at least for the time being.”

Sign up to our daily email