The number of tenants seriously in arrears with regard to their rent payments has risen by 13.8% over the last three months.
In the months from June to September 2015, the number of tenants who were considered seriously behind on their rent (i.e. late on payments by more than two months) went up from 74,000 to 84,200. This make the total the highest it ‘s been since the beginning of 2013. We are still relatively comfortably behind the all time highs reached at the end of 2012, when 116,600 people were considered seriously in arrears, but the sharp increase lately has been seen as cause for concern.
The data comes from the quarterly survey conducted by Reeds Rains and Your Move, both estate agents who did maintain that, despite the worrying figures in terms of raw numbers, this does only amount to 1.6% of tenants in the country. Adrian Gill, executive director for both Your Move and Reeds Rains, said that “the chance of an individual tenant falling into serious arrears remains very low,” adding that “in general, renting works for most people.”
High costs of rent are thought to be largely to blame. This is particularly the case in London, where the average monthly rent for a double room costs £700 (compared to £492 for the rest of the UK). This amounts to roughly a quarter (in London, slightly close to a fifth for the rest of the UK) of the average annual salary being spent on rent each year.
The Association of Residential Letting Agents reported recently that “unfortunately for renters, rent prices are likely to go up in 2016”. A large part of their justification behind this prediction came from warnings that the recent draft of changes designed to restrict the private letting market (such as the recent buy-let stamp duty surcharge) would cause landlords to up their rent to make up for the shortfall.
However, a recent survey of private landlords suggested that this may not be the case, that for the most part, landlords will not be increasing their prices in the face of a 1.5% increase in mortgage interest rates that could follow these latest policy changes (along with a potential hike to the Base Rate). 60% of those surveyed claimed that their existing income was sufficient to mean that they didn ‘t need to raise prices in order to cope, and the rest already had enough capital tucked away to be able to make up for a shortfall if needs be. 13% of those said that they would be increasing their prices.
While the portion of landlords who said they ‘ll raise their prices as a direct result of policy changes isn ‘t particularly high, average rent costs will still increase somewhat. Homelessness charity Shelter has expressed concern over the inability to afford rent that is becoming more and more commonplace. They reported that some 2.5 million households are now having to scale back spending for basic necessities like heating as a result.
Competition for rented accommodation continues to rise, with one study now claiming that every available room in London now has, on average, ten potential tenants fighting over it. This has almost doubled since 2013.