65,000 PRS Tenant’s In Severe Rent Arrears

Tuesday, November 11, 2014

Number Of PRS Tenant’s In Severe Rent Arrears Drops Another 9%

Number Of PRS Tenant’s In Severe Rent Arrears Drops Another 9%

Number Of PRS Tenant’s In
Severe Rent Arrears Drops Another 9%

New data published by LSL Property Services shows that in the third quarter of this year, the overall number of private rental sector (PRS) tenants who are in severe rent arrears has dropped 9%, when the figures are analysed year on year.

The drop in severe rent arrears is good news for landlords operating without Rent Protection Insurance in the UK’s private rented sector, as their financial survival can depend on receiving a regular rental income.

According to the data, some 65,000 PRS tenants are still in severe rent arrears, being more than 8 weeks or 2 months behind with the rent, a drop of 6,700 (1.4%) compared to the same period last year, (1.6%).

LSL’s latest Buy-to-Let Index showed that PRS rent arrears accounted for just 7.2% of all UK rents paid in September, down from 8.5% recorded in September 2013.David Newnes from LSL property services stated: “Gradual rent rises, on a par with inflation, have helped. But now a bigger turnaround appears to have happened. For many years more momentary cases of rent arrears have been in decline, yet it’s only recently that the most serious cases, where families could actually lose their homes, are following suit. The private rented sector has helped to meet the growing level of demand for affordable housing in what has been the greatest economic depression in modern times. The private rental sector has provided a lifeline for people with limited incomes and is now the chosen form of accommodation for many, who favour the flexibility and mobility that renting offers.”

The fall in the overall number of PRS tenants in severe rent arrears is in part due to the increasing use of rent protection insurance policies, where the landlord is guaranteed continuous rental income should the tenant experience a sudden change in circumstances.

However, even the best tenant referencing system cannot predict whether a tenant will become unemployed, or suffer from a serious illness or accident which leaves them unable to work. Landlords can avoid the inconvenience of rent defaults with 100% rental income protection, plus these other huge benefits:

  • Unlimited period of rent arrears covered up to £50,000
  • Policy also includes the cost of evicting your defaulting tenant
  • Legal expenses covered up to £50,000
  • 50% of the rent paid for a further 2 months after the tenant is evicted
  • Rent protection are available for both 6 and 12 month terms

Whether a landlord owns a large portfolio of buy to let residential properties or has just a single or multi-let property investment, non-payment of rent is a serious and increasingly common problem that causes financial issues for many landlords, that is why more and more landlords are opting to use clever insurance policies like rent protection insurance.

Rent arrears will always be a problem within the UK’s private rental sector, as tenant finances are often squeezed by the cost of living, and landlords without rent protection insurance are becoming resigned to living with rent arrears, according to a new survey conducted by Paragon Mortgages:

  • 61% of UK landlords predict that tenant rent arrears will remain at a stable level over the next 12 months.
  • 12% of UK landlords expect the amount of tenant rent arrears to increase
  • 8% of UK landlords forecast that the amount of tenant rent arrears will decrease

This was written by Mike Clarke. Posted on at 11:30 am. Filed under Insurance. Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. Follow comments here with the RSS feed. Both comments and trackbacks are currently closed.