There has been a drop in the number of tenants falling into serious rent arrears, which is great news for renters – and landlords.
The report from the estate agency chains Your Move and Reeds Rains found that tenants renting their homes from private landlords are less likely to suffer from a serious build-up of late rent thanks largely to falling unemployment levels.
The latest report shows that only 86,200 tenants across the UK are were more than two months behind in their rent in the first quarter of the year, down 4% compared with the 89,300 recorded in the previous quarter.
The level of tenants in serious arrears in the first quarter is lower than the long-term average of 92,600 tenants – dating back to Q1 2008.
Serious rent arrears peaked in Q3 2012, when 124,800 households owed more than two months’ rent – and when unemployment in the UK stood at 7.9%. Since then a boom in employment has been responsible for lifting many of the most precarious tenant households out of serious rent arrears and onto a more sustainable course.
“Fewer tenants in serious arrears reflect the health of the jobs market. With an extra 44,000 jobs created in the first quarter of this year, thousands of tenants have been able to get their finances back on track and pay down late rent,” said Adrian Gill, director of estate agents Your Move and Reeds Rains.
Gill pointed out that a reduced risk of serious rent arrears is “welcome news” for existing landlords facing so many “artificial challenges” posed by government meddling, but he warned that no-one should be complacent – “managing a property is never simple”.
He continued: “Some landlords are being held back from buying property by the stamp duty surcharge. If this stems the flow of new homes into the rental market, then shortages in some areas could push up rents – hitting affordability.”
The number of tenants more than two months behind with rent has fallen by 16% since the eve of the financial crisis and recession in Q2 2008 – from 102,900 in Q2 2008 to today’s total of 86,200. This is despite the expansion, over exactly the same period. At the start of this period, there were 3.6m on households living in the UK private rented sector. Now, after just eight years, this has grown by 62% to reach a total of 5.8m households as of Q1 2016.
Gill added: “The massive growth in the number of homes available to rent – driven by both deliberate landlords and accidental landlords coming into the market – has ensured that rents have not outpaced the ability of tenants to pay.
“The affordability of renting and the number of tenants falling behind on rent also needs to be seen within the context of the rapid expansion of the private rented sector and the addition of millions of extra houses and flats to rent.”
As a result of this improving picture from tenant rent arrears, the number of eviction orders issued has also dropped considerably.
In Q1 2016, there were 26,230 court orders made for eviction as a result of possession claims by landlords in the county courts, down from 26,964 in Q4 2015.