Number of tenants in serious arrears jumps 20% year-on-year

8th March 2016

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The number of private tenants in serious rent arrears, with a build up of more than two months’ late payments, increased by nearly 20% year-on-year in the last quarter of 2015.

The latest Tenant Arrears Tracker by estate agency chains Your Move and Reeds Rains found that by the final quarter of 2015, a net 1,500 households have moved out of serious rent arrears, compared to Q3.

This is a 1.5% quarter-on-quarter improvement, and reverses some of a deteriorating trend throughout the earlier parts of 2015. There are now 82,900 households behind on more than two months’ rent, down from 84,200 in Q3 2015.

While correcting an emerging upward trend, the latest quarterly improvement still represents a worsening on an annual basis.

The number of tenants in serious rent arrears remains 19.5% higher than in Q4 2015.

As a proportion of the entire market, the latest total represents 1.6% of tenancies across the UK private rented sector. This compares to a peak proportion of 2.9% of tenants in Q1 2008.

The absolute number of tenants in serious arrears is considerably below the record 116,600 such cases seen in Q3 2012.

Meanwhile, in the same quarter of Q4 2015, there were a total of 26,676 court orders issued for the eviction of tenants, on a seasonally adjusted basis. This is down marginally by 0.4% compared to Q3, when seasonally adjusted eviction orders stood at 26,775. On an annual basis, downward progress for evictions is more considerable, with 5.3% fewer evictions than 28,167 a year before in Q4 2014. The latest figures for evictions represent 32% of the stock of tenants in severe arrears in Q4, meaning only around one-in-three such cases translate into evictions each quarter.

Landlord finances healthiest on record

Cases of landlords falling behind on their own financial commitments are also diminishing. As of Q4 2015 there were 5,500 examples of buy-to-let mortgage arrears, down by 3.5% from 5,700 in Q3, and a resumption of downward progress after the figure previously remained the same between Q2 and Q3 2015.

On an annual basis, progress for landlords’ finances has been far more considerable. The number of buy-to-let mortgages in arrears has dropped by 54% since standing at 11,900 cases in Q4 2014.

Eviction rates drop in response to healthier tenant finances

Meanwhile, in the same quarter of Q4 2015, there were a total of 26,676 court orders issued for the eviction of tenants, on a seasonally adjusted basis. This is down marginally by 0.4% compared to Q3, when seasonally adjusted eviction orders stood at 26,775. On an annual basis, downward progress for evictions is more considerable, with 5.3% fewer evictions than 28,167 a year before in Q4 2014. The latest figures for evictions represent 32% of the stock of tenants in severe arrears in Q4, meaning only around one-in-three such cases translate into evictions each quarter.

Adrian Gill, director of estate agents Your Move and Reeds Rains, says: “It would be wrong to say that the UK private rented sector is perfect. But in the context of these facts, the demonisation of landlords by some policy makers seems at best out of proportion.

“Most urgently, rising rents are a signal that demand is there for even more homes to let. In a purchase market that increasingly favours sellers, demand from would-be first time buyers will continue to grow even faster for rented homes.

“Additional investment from landlords should be welcomed. Yet the government’s looming Stamp Duty surcharge – which explicitly punishes investment in new buy-to-let properties – could damage supply of additional homes to let and potentially disrupt the relative balance of the modern buy-to-let industry.”

 

 

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