Severe Rent Arrears on the Rise

04 January 2012 Categories: News

Severe Rent Arrears on the Rise

According to Templeton LPA, a specialised form of LPA receivers, the number of tenants considered to be in severe rent arrears has risen to the highest rate since the third quarter of 2008. At the end of 2011, just short of 79,000 tenants of UK Landlords across England and Wales were in severe arrears i.e. more than 2 months behind with rental payments. This constitutes an 18% rise on the figure reported at the end of 2010. 

Encouragingly though, tenancies in severe arrears only account for 2.4% of all rent arrears in the private rental sector throughout England and Wales, and overall the number of tenants with any form of rent arrear fell during 2011.

Understandably the increase in severe rental arrears has been accompanied by an increase in the number of court-ordered tenant evictions. The last three months of 2011 saw the number of tenants facing an eviction order rise to nearly 25,000; an 11% increase on the same period of 2010 and more importantly a 5.4% increase on the second quarter of 2011.

When asked how he thought the situation was going to fair in 2012, the Director of Templeton LPA, Paul Jardine, said “We expect that mortgage arrears will climb next year. Given the economic challenges the UK faces, and the worsening labour market, we anticipate that both overall arrears and severe arrears will rise in 2012 – and this will feed into increased tenant evictions and hamper a growing number of landlords‘ ability to meet their monthly mortgage costs.”