Rising number of tenants falling into severe arrears
Posted by Lucy Wooldridge
Using the property management services of a lettings agent to carry out full referencing of tenants could become an increasingly valuable resource for landlords arrears rates rise.
With demand for rented accommodation soaring landlords have been enjoying record rent levels in recent months.
However, new figures from Templeton LPA chartered surveyors suggest that this, combined with the weak economy and difficult jobs market, is increasing the likelihood of tenants falling into serious arrears with their rent.
The data shows that there are currently 78,970 tenants in England and Wales who are at least two months behind in paying their rent - which is nearly 11,400 more than at the same time last year.
But it was also revealed that, while instances of severe arrears are rising, total arrears levels are actually falling.
Templeton's Paul Jardine commented: "The soaring cost of renting has created a two-speed market.
"The overall tenant population has coped relatively well with rising rents and soaring living costs - with total arrears actually down year on year in November.
"But a growing minority of renters are falling deeper and deeper into payment difficulties, and the number of severe arrears cases is rising."
Landlords could reduce the chances of taking on tenants who will be unable to keep up with rent payments by using a tenant referencing service, which will provide details of the prospective tenant's financial situation and rental history.
Mr Jardine added: "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."
Meanwhile, the Association of Residential Letting Agents also recently predicted a rise in arrears in 2012 and recommended landlords use tenant referencing to help mitigate this.
"While it is impossible to know whether someone will be solvent in the future, it is important to carry out relevant checks on a potential landlord or tenant, to look for signs of financial instability," said operations manager Ian Potter.
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