The financial downturn continues to bite, and it may well be that property investors with an interest in landlord insurance could be amongst those to suffer.
A report out this week shows over 100,000 tenants are now in serious arrears with their rent. The figure relates to the second quarter of 2012 and is the highest recorded figure since the Tenant Arrears Tracker was first introduced back in 2008. There is no real mystery as to why the figures have shot up, as fuel prices, food and rental charges still remain high in all parts of the UK, and of course with major employers such as local authorities, NHS hospitals and even the army shedding jobs in their thousands, unemployment continues to play a big part. A closer study of the report shows the number of tenants now more than two months in arrears with their rents is up by a massive 24% on the same time last year, and up 8% on the first quarter of 2012. In fact the 100,000 tenants in serious arrears account for less than 3% of the tenant population but is nevertheless a big worry for many landlords.
Paul Jardine, a director at chartered surveyors Templeton LPA, said: “As the private rented sector grows, the number of tenants in dire financial straits is steadily climbing. Falling wages in real terms have been compounded by rising rents, pushing a greater number of rented households over the edge financially. With the instability in the labour market and wider economy, and public sector cuts still to come, the section of renters in multiple months of arrears is likely to continue its expansion.”
With the true effect of the reforms to the Government’s Welfare Bill still to be felt in many areas, landlords, who are by and large still doing very well, will keep a wary eye on their bank balances for the foreseeable future.