It appears that landlords looking to add to their portfolios by buying more properties and purchasing landlord insurance, could not pick a better time than now. With house prices falling again, landlords have received even better news, as a survey of landlords reveals that rent arrears are falling also.
The report, based on a survey of landlords by LSL Property Services, revealed that 8 out of 10 landlords say the amount of rental arrears owed by tenants has fallen or at worst remained stable over the last 12 months. Of the landlords who reported an increase in arrears the majority said the increase was only minimal. The report pinpoints tenants in cheap accommodation as the ones most likely to be in arrears.
The average rent of those actually in arrears works out at £472, considerably less than the average rent in the UK, which is around £625. The amount of rent owed in one calendar month in the UK is not to be sneezed at however. According to the report July 2010 saw the lowest recorded arrears for several years yet the figure was still £213 million. To put that in context, £213 million is less than 10% of the overall amount paid out in rent each month.
The commercial director of LSL said “The hike in tenant arrears hasn’t materialised in the last 12 months as many feared. With the labour market remaining relatively strong, most tenant finances have been in better shape than expected – keeping the overall arrears across the UK down. But a minority of landlords have experienced an increase, driven by lower income tenants renting out cheaper accommodation. Those who suffered first from the recession were those in lower paid jobs, often the most disposable workers when employers look to cut. Even so, a changed tenant mix has improved the arrears picture for many landlords. Thousands of would-be first-timers are remaining in the private rental sector. These are generally more financially stable, and able to meet higher rents on time.”