Private rental property increase in upaid rent

 
The figures represent a two year low and of those landlords dealing with arrears a quarter say they are dealt with much more quickly than a year ago. As a result severe arrears are at their lowest level since April 2009.
 
The research from LSL Property Services, also shows that 82% of landlords see void periods of under four weeks each year and the last few months has seen increased confidence in the sector.
 
Despite fears over the impact of the recession, and six consecutive months of rent rises, 84% of landlords saw arrears remain stable or fall in the past 12 months.  Just 16% of landlords reported more tenant arrears cases in the past 12 months, with 11% of these only seeing a slight increase in the number of tenants in arrears. This rise has been driven by tenants in cheaper accommodation failing to meet lower rents.
   
Across the UK, the average rent of those in arrears to £472 per month in July, 30% lower than the average monthly rent. One year ago, it was £492 owed per month, 75% of the average UK monthly rent.
 
As a result, the total amount of rent owed across the UK each month has actually dropped in the last year. In July, £213 million of rent was unpaid, according to LSL’s latest Buy to Let Index, the lowest figure since the group began compiling the figures over two and a half years ago. This amounts to just 9% of all rent across the UK, down 2% from a year ago, the same as in June 2010.
   
‘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,’ said David Brown, commercial director of LSL Property Services.
 
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,’ he added.
 
The strong performance of arrears has also been helped by the change in practices of landlords.  A quarter of landlords say they have changed the way they handle arrears in the past 12 months and now move much more quickly to combat arrears.
 
This has contributed to the improved number of tenants in serious arrears. In July, just 2% of all UK tenants in the UK were late by two months or more with their monthly rent, according to data. This is at its lowest since April 2009, and represents a drop from its peak of 2.5% in March 2009.
 
‘The changing practice of landlords has helped trim down the number of tenants slipping into severe arrears. In a world where house prices aren’t rocketing up, landlords are no longer focussing on capital gains for their profit, they are more conscious of the value of rental income. Now landlords are reacting more quickly to any situation that may hamper their cashflow before tenants fall into severe arrears,’ explained Brown.
 
He added that in the short term he expects arrears to continue to perform well. ‘With mortgage finance unlikely to loosen up in the foreseeable future, we predict thousands of financially robust frustrated buyers will continue to rely on rented accommodation. But when the full impact of government spending cuts are felt, the knock-on effect may well hit both high end, and low budget renters, causing arrears to return to the higher levels of two years ago.’