Member Article

Serious tenant arrears fall 4% as jobs boom

Fewer tenants are falling into serious rent arrears thanks to the improving employment market, according to letting agents Your Move and Reeds Rains.

In absolute terms, just 86,200 tenants across the UK are more than two months behind in their rent. This compares to 89,300 in the previous quarter. This represents a 4% fall and means that 3,100 households in homes to let have moved out of serious rent arrears since the end of 2015.

Since 2008, there have been on average 92,600 tenants in serious arrears in the first quarter of each year – meaning that Q1 2016 is also substantially lower than the long-term average.

Adrian Gill, director of estate agents Your Move and Reeds Rains, comments: “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. 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. The direction of travel looks very positive.

“A reduced risk of serious rent arrears will be welcome news for existing landlords, facing so many artificial challenges posed by government meddling. But no-one should be complacent – managing a property is never simple. 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 3.6 million households living in the UK private rented sector. Now, after just eight years, this has grown by 62% to reach a total of 5.8 million households as of Q1 2016.

Adrian Gill adds: “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.”

Click here to read the full Your Move Arrears report.

This was posted in Bdaily's Members' News section by Property Editor .