Tenants who fail to pay their rent on time is the bane of all landlords lives, luckily for them the situation is improving. The number of tenants in the UK facing rental arrears has dropped by 35,000 or 35% over the past year. This leaves 67,000 households who are 2 months behind on rent, a significant reduction from 102,000 at the same period the previous year.
According to the latest Tenant Arrears Tracker report, now 98.5% of private sector tenants avoid significant arrears. The number of households that owe arrears over any period of time is down to 7%. The decrease of households in rental arrears can be attributed to improvements in the job market and wage increases.
While the figures show an increase in tenants paying their rent on time, the proportion of people facing eviction has continued to rise. 33,000 tenants faced potential eviction via court order in the first quarter of 2014, an increase of 5.9% from the previous quarter.
Most landlord insurance policies include contents and building protection, liability cover, emergency assistance and legal cover but don’t include rental income protection. Landlords are able to protect themselves against tenants who fall behind their rent payments by taking out specialist rent guarantee protection.
This form of landlord insurance means landlords will still receive rental income even if the tenant defaults. This type of cover can be beneficial to landlords as it gives them time to come to an agreement and recover rental arrears rather than simply evicting the tenant.
Landlords in mortgage arrears have fallen for 6 consecutive quarters with just 14,700 buy to let mortgages in arrears in the past quarter. On an annual basis, buy to let mortgages in arrears have improved by 17.9%.
According to Jardine Sales and Letting, when tenants fail to pay rent, it is advised that the landlord and tenant open up a discourse into how the tenant can get their rent back in the black. It is better that a plan is worked out where they are able to pay back money owed rather than being forced out and the landlord being entirely out of pocket.
According to a study carried out by the Landlord Panel from the National Landlords Association, nearly half (47%) of landlords have experience rental arrears over the previous 12 months. With the UK economy continuing to improve, it is likely that this figure will be less this coming year.