Rent arrears up amid cost-of-living crisis for tenants

Rent arrears up amid cost-of-living crisis for tenants

0:06 AM, 17th April 2024, About 2 months ago 3

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Average rent arrears claims have reached a record high, placing a growing strain on both tenants and landlords, data reveals.

Alternative deposit provider Reposit analysed the figures between January 2021 and March this year and found that the average arrears claim was £1,816 in the first quarter.

That’s a 27% increase on the same period last year.

It’s also the highest level recorded and reflects the ongoing pressures facing the rental sector.

‘Arrears claims topping £1,800’

The chief executive of Reposit, Ben Grech, said: “Five-week cash deposits now average £1,256 and with arrears claims topping £1,800, more and more landlords are at risk of not having enough deposit to cover possible losses.

“Our data shows that in 14% of cases, a five-week cash deposit is inadequate against the costs incurred.”

He says that deposit alternative products offer landlords up to eight weeks of cover and provide a choice for tenants with the opportunity to pay one week’s rent, as a non-refundable fee.

Rate of increase in arrears claims

The research also found the rate of increase in arrears claims is slowing and grew by just 0.8% in the last quarter of 2023.

That compares with an 11% rise in the same period last year.

This, the firm suggests, reflects the impact of rising inflation, which peaked at 11.1% in October 2022, and may be easing.

However, the number of tenants ending their tenancy with unpaid rent continues to climb.

Its data shows that 18% of tenancies ended with arrears in the first quarter of 2024, up from 15.3% in the previous quarter.

Mirrored across the wider property market

The trend of rising arrears is mirrored across the wider property market and a recent report from UK Finance found there were 13,570 buy to let mortgages in arrears at the end of December.

The increase in arrears also coincides with a rise in average rents.

The data shows average monthly rents rose by 10% to £1,108 in the first three months, compared to the same period last year.


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Comments

northern landlord

13:19 PM, 17th April 2024, About 2 months ago

First people were priced out of buying a house and were forced to rent. Now increasingly they can’t afford to rent either as evidenced by the rise in arrears. The Government try to blame greedy landlords for this but costs have increased, landlords are bailing out and supply and demand pushes prices up. Presumably at some point the Government (of whatever shade) will foolishly try to control rents and even apply eviction bans expecting the PRS to house people for free, prompting more landlords to throw in the towel.
We are told the economy is picking up but have ordinary people noticed? Of course not. In truth Governments of all shades don’t care about ordinary folk they are morally bankrupt and are puppets for “the markets”. They want a low wage economy to attract overseas investment. As the late comedian Bill Hicks said when offered a choice of puppets to vote for, "I think the puppet on the right shares my beliefs." "I think the puppet on the left is more to my liking." Hey, wait a minute, there's one guy holding out both puppets!

Reluctant Landlord

14:37 PM, 17th April 2024, About 2 months ago

'deposit alternatives' are only there to provide a choice for the tenant of how they can potentially secure a property if they do not have a cash deposit.

Zero incentive for a LL - in fact more paperwork and more hassle.

If the tenant can't put up their own deposit (which is essentially a bond against how they treat the rental property), then what impression does that give?

GlanACC

7:58 AM, 19th April 2024, About 2 months ago

Reply to the comment left by Reluctant Landlord at 17/04/2024 - 14:37
I have never taken deposits and it has never really caused any issues. As in the past most of my tenants were in the property for 3+ years I used to repaint from top to bottom anyway. Only issue I ever had was rent arrears or letting a fully furnished house (I soon learnt my lesson on that one)

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