The number of tenants seriously behind on rent has risen to the highest level in two years, according to the latest Tenant Arrears Tracker by estate agency chains Your Move and Reeds Rains, part of LSL Property Services PLC.
There are now 74,000 tenants owing more than two months’ rent, as of Q2 2015. This means 5,000 more households are in significant arrears than a year ago, or an annual increase of 7.2% since Q2 2014, when this figure previously stood at 69,000 across the UK. On a quarterly basis, the number of cases of severe arrears has risen by 4.4% or 3,100 households, since standing at 70,900 in Q1.
The recent worsening in the number of tenants in serious difficulties remains relatively mild by historical comparison. Compared to the worst peak of serious rent arrears, seen in Q3 2012, when 116,600 households owed more than two months in late rent, this has moderated significantly.
The chance of a given tenant falling seriously behind on rents is still extremely low. As a proportion of all tenancies, those in severe arrears represent just 1.4% of all tenants, stable compared to the previous quarter and the same as was seen a year before in Q2 2015. This compares to 2.9% of tenants in Q1 2008 (twice the current proportion), even before the worst of the financial crisis and recession.
Adrian Gill, director of estate agents Your Move and Reeds Rains, comments: “Across the UK most households are beginning to earn more, and it is this majority of tenants who are able to bid up the price of rented homes in the face of constricted supply. Rents are accelerating in response – rising by more than 5% over the last year according to our separate research.
“But behind this headline buoyancy, there is a less positive story. For a small minority there has been no transformational boost to household earnings, and it is this more marginal population of tenants who are feeling the squeeze of rising rents most sharply. Severe arrears are still much lower than their previous peaks – but a lack of further progress highlights the underlying and fundamental supply shortage. Tenants need more available properties on the market, and landlords should be encouraged to invest further in order to keep up with growing demand.”