Rent arrears soar amid economic woes

Rent arrears soar amid economic woes

0:01 AM, 7th March 2024, About 5 months ago

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Tenants are facing mounting difficulties in paying their rent as the economic situation worsens, research reveals.

The data from Reposit, the FCA-regulated deposit alternative, found a worrying increase in the value of rent arrears claims.

They jumped from £1,344 in October to £2,108 in November and remained high at £1,954 in December.

At the same time, the proportion of tenancies ending with arrears increased from 13.7% in September and October to 15.8% in the following two months.

‘Naturally has a knock-on effect for landlords’

The firm’s chief executive, Ben Grech said: “The increase in rent arrears is obviously reflective of tough times for tenants, but this naturally has a knock-on effect for landlords, who are facing their own challenges with Renters Reform and higher mortgage rates.

“It’s clear that tenants need a better option to relieve their cashflow burden, while landlords need greater cover in the event of arrears – we already know that a five-week cash deposit is insufficient in 14% of cases.”

He added: “Furthermore, it naturally increases the strain on letting agents. With increased arrears comes increased paperwork, disputes and delays.”

Rent arrears claims in December were 50% higher

The amount of rent arrears claims in December 2023 was also 50% higher than in December 2022, despite the rents rising by 4% in the same period.

This increase in rent arrears is linked to wider economic trends, the firm says, including the growing number of defaults on mortgages and credit cards in the same period.

The data suggests that the rising cost of living is affecting tenants’ ability to fulfil their financial obligations.

Rightmove’s trend tracker also indicates that tenant affordability is at a critical point, with 23% of rental properties having a lower advertised rent – highlighting the financial pressure faced by tenants.

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