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Tenants in arrears fell 16% in Q4 2012

Your Mortgage
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Your Mortgage
Posted:
Updated:
03/01/2013

The number of tenants in severe arrears has fallen for the first time in over a year, according to an arrears survey.

The Tenant Arrears Tracker by Templeton LPA, part of LSL Property Services, revealed the trend of rising arrears levels of roughly 10% for each of the preceeding four quarters has reversed.

Templeton said the number of tenants in severe arrears, defined as being two months behind with the rent, fell by 16,000 in the fourth quarter to 86,000, which is the lowest level since Q4 2011.

The quarterly drop slowed annual growth in the number of tenants in severe arrears to just 0.3%, which is 2.2% of tenancies in England and Wales, down from 2.5% in the previous quarter.

Overall, there was also a wider improvement in arrears cases with 7.4% of all rent late or unpaid, against 8.1% in the previous month.

Paul Jardine, director and receiver at Templeton LPA, said: “The recent strength of the labour market has played the biggest role in halting the upwards climb in the number of tenants in severe financial difficulty.

“Unemployment has fallen dramatically to 7.8%, and with 44,000 more full-time jobs in the three months to November, fewer households have faced seeing their monthly income halted and their ability to meet the monthly rent cheque hampered. If the UK’s economy can avoid falling into a triple dip recession in 2013, a further improvement in employment levels will go some way towards preventing arrears cases from rocketing up.”

However, landlords served 5.5% more eviction notices last quarter, with 25,756 tenants facing action.

On mortgage arrears, the number of buy-to-let mortgages over three months in arrears rose by 0.9% to 21,900 by the end of the third quarter of 2012, compared with a fall in the previous quarter of 9%.

Paul Jardine continued: “After a year of increasing severe arrears, landlords are more aware of their legal protection than ever, and a more proactive approach to tackling arrears has helped rein in severe tenant arrears. However, the Funding for Lending scheme is bringing historically low mortgage rates down further, and this should continue into 2013, which will leave landlords increasing room for manoeuvre when cash-flow problems do emerge. In turn, this is likely to place downwards pressure on buy-to-let arrears over the medium-term, in the absence of a major downturn in the labour market.”


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