£31Million Drop in Tenant Arrears
Recent figures show a £31million drop in outstanding rent arrears in may, according to the latest Buy-to-Let Index from LSL Property Services plc
Rents rose for a second consecutive month in May, according to the latest Buy-to-Let Index from LSL Property Services plc, which owns the UK’s largest lettings agent network, including national chains Your Move and Reeds Rains.
In May, the average rent in England and Wales rose by 0.4% to £712 per month, with rents returning to their January level. Despite the monthly rise, the rate of annual increase slowed, with rents 2.3% higher than a year ago, compared to 2.4% in April.
Part of this fall in the amount of outstanding rent arrears is coming from the usage of private debt collection agencies who are helping landlords up and down the country to recover their outstanding bad debt.
David Newnes, director of LSL Property Services comments
“The end of spring has brought with it renewed activity in the rental market, and rents have returned to the level seen before the impact of the stamp duty deadline rush by first-time buyers. The reality is that thousands of frustrated buyers are still financially trapped between a rock and a hard place. Historically high rents and rock-bottom savings rates are hampering attempts to save for the larger deposits banks now require – not to mention meeting the cost of the reinstated stamp duty tax. In turn, fewer tenants are able to leave the sector, and the strong tenant competition is pushing up rents as a result, making saving for a deposit harder still.”
Overall rental arrears improved after a seasonal increase in April, with 8.9% of all rent late or unpaid at the end of the month, down from 9.9% in March. In total, unpaid rent in May amounted to £275m, down from £306m in the previous month.
“Rental arrears took a turn for the better in May, following a seasonal spike triggered by Easter holiday spending. In fact, while a minority of tenants may be facing severe financial difficulties, the general tenant population has broadly coped well with high rents and the rising cost of living so far this year. However, with the economy struggling and the labour market far from flourishing, households will remain under financial pressure, and it is crucial landlords are not caught flat-footed by a deterioration in tenant finances.”