Landlords will be pleased to hear today that the number of tenants in England and Wales in severe rental arrears has dropped in the fourth and final financial quarter of last year. According to the latest Tenant Arrears Tracker by Templeton LPA the amount of tenants in sever rental arrears has fallen by 15.6% per cent in the last quarter, which is the first time the amount has reduced since the final quarter of 2011.
The amount of tenants whom are in severe rental arrears was only sixteen thousand in the fourth quarter, whilst in quarter three there were eighty-six thousand. This means that only 2.2% of those living in private rented accommodation are now in severe rental arrears, which have gone down from 2.5% in the previous quarter. Severe rental arrears differs from regular rental arrears as it means that a tenant has failed to pay their rent for over two months, which is a huge problem for landlords without landlords insurance of rent guarantee insurance.
Director and receiver at Templeton LPA, Paul Jardine said: “Tenants’ finances have suffered a gruelling combination of rising living costs and rental inflation throughout much of 2012. With many budgets balanced on a knife edge, a slight reprieve from rapid rent rises towards the end of the year has been very significant. But the recent strength of the labour market has played the biggest role in halting the upward climb in the number of tenants in severe financial difficulty.”
The commercial Director of LSL Property Services, David Brown, also commented on the change to the private rental market, saying “More investment in the private rented sector is needed. Thankfully strong tenant demand and yields are tempting more people to invest in the sector and existing landlords to expand their portfolios. But investors should place financial suitability of any prospective tenant high up in their agenda when letting a property. Cutting corners at the point of vetting a tenant is false economy, and can prove costly. It is far easier to take action to prevent arrears in the first place, than to resolve them after they have occurred.”