Rent arrears at lowest level for ten years, landlords reveal

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The average number of tenants in rent arrears is at its lowest point for ten years, according to Paragon Bank, while the amount of outstanding rent is the lowest since 2017.

New research shows that in the second quarter of this year, landlords had an average of 1.3 tenants with outstanding rent payments, the lowest number since the first quarter of 2011 when research agency BVA BDRC started its survey.

This has continued to fall consistently after climbing to 2.1 in Q2 2020, as the Covid-19 pandemic hit incomes.

The average amount of outstanding rent has reached a four-year low, adds Paragon, after falling from £2,376 in Q1 2021 to £1,781 in Q2, and the lowest figure since the end of 2017 when it was £1,584.

Rent reductions

The survey of more than 750 landlords found that just over a third (36%) have had a tenant request a change to their rent, most commonly rental holidays (18%) or a reduction in rent of up to 20% (14%).

Agreements were reached in almost all cases as 36% of landlords said they had granted requests to some form of change. These requests have also been falling off since the start of the pandemic, with the proportion of those asking to change rental agreements dropping by seven percentage points year-on-year.

Moray Hulme (pictured), Paragon Bank’s director of mortgage sales, says the vast majority of landlords are supporting tenants.

He adds: “These requests have been falling alongside the incidences and volume of rent arrears, and considering that the fewest number of people are now on furlough since the scheme launched in March 2020, it is a good indicator that the economy is bouncing back well.”

Read more about rent arrears.

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Bold action needed to save the PRS

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Covid-19 restrictions are easing, so now is the time to take decisive action to support landlords and tenants. NRLA chief executive Ben Beadle shares his thoughts on the country’s rent debt crisis and what the Government can do to tackle it.

After months of emergency restrictions as a result of the Covid-19 pandemic, measures are now being lifted.

It has been a tough 18 months for the sector – and while we are pleased change is coming, following extensive talks between the NRLA, ministers and civil servants, more is needed.

Latest figures show that a debt crisis is on the horizon.

New research carried out on behalf of the NRLA shows more than 800,000 of those living in the private rented sector in England and Wales have built arrears since lockdown measures started last year.

This is despite 82% of those owing no rent debt prior to lockdown.

We need the Government to step up to help these tenants and the landlords who house them.

Campaigning

We have been campaigning for a comprehensive package of financial support for the sector for some time now and we continue to lobby the Government to commit resources to this to help maintain tenancies and ease the pressure on the already overburdened legal system.

Those landlords who have no option but to repossess will also need support.

Recent figures show average waiting times from claim to possession were more than a year (57 weeks) in the first quarter of 2021 and action must be taken now to reduce that backlog.

Possession claims fell considerably during the pandemic, with the courts closed and landlords doing all they could to keep tenancies going.

If we want the courts to be able to tackle the backlog, then we need to keep those tenants who are in arrears as a result of the pandemic in their homes. We need to tackle the issue of arrears head on.

The NRLA’s proposal, for ringfenced Government support, includes interest free loans to allow tenants to pay off Covid-related arrears and stem the number of cases going to court, as well as grants for those claiming benefits.

Court figures

Latest figures show almost 23,000 possession claims have been made since the courts closed in March 2020. However, the same time frame only 8,600 possession orders have been issued.

This leaves a substantial proportion of claims – more than 60% – still unheard.

There are also enforcement issues.

Bailiff enforcements were permitted as of June 1 in England. At this point there were around 11,000 warrants, 70% of which are estimated to have pre-dated the pandemic – and the figures are only going to go one way as news claims are submitted.

However, there are changes that can be made by Government to streamline the process and help tackle this backlog.

These include:

• Getting rid of the additional ‘review’ hearings. These were introduced during the pandemic as a means of prioritising cases, but are now contributing to the delays
• Making greater use of digital remote hearings over the phone or online for simple cases
• Increasing the use of High Court Enforcement Officers to tackle the backlog of enforcement

There are also a number of technical administrative changes which could also make a difference when it comes to wait times.

The NRLA has produced an in-depth report on the challenges, and potential solutions, which can be read here.

Resolution outside the courtroom

Landlords too can play their part and we would encourage them, where possible, to look outside the courtroom for solutions should they have issues with their tenancy.

Mediation and conciliation – while not guaranteed to work in every case – can be highly successful. If your tenant has fallen into arrears working with them or via a mediation service to find a suitable payment plan can help you avoid court or, at worst, show you have made every effort to avoid it.

NRLA members can access a free mediation service provided by TDS  to this end.

We are on the road to recovery and, although we are not there yet, we at the NRLA will rise to the challenge and continue to campaign at the very highest level for positive change to sustain the sector.

For more information about the NRLA campaign lobbying for Government support for the sector click here.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Bold action needed to save the PRS | LandlordZONE.

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Good Samaritan landlord faces £13,000 RRO despite helping tenants during Covid

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London landlord Philip Griffiths is the latest to have been slapped with a big Rent Repayment Order for renting out his unlicensed HMO, even though he helped his tenants afford their rent and was flexible when they paid late.

Griffiths tried to show the tribunal that he would struggle to finance the order, saying that coping with unpaid rent meant he had applied for a Bounce Back Loan but his repayments exceeded his income.

But a First Tier Property Tribunal ordered him to pay back £12,965 to three tenants at his house in Earlsfield Road, along with £300 costs.

The court heard that Griffiths was not aware the HMO needed a licence during the tenancy from February to December 2020. He believed that two of the tenants were classed as one household and did not fail to licence it intentionally.

Faulty electrics

The tenants claimed the house was let in a filthy and unhealthy state. They reported a rat infestation, mould on the living room wall, shower head and other areas, along with faulty electrics and plumbing, an old redundant boiler which often broke and fake or not working fire alarms.

But Griffiths disputed the allegations of poor repair and said the fact that two of the tenants were still living in the property proved its condition was not that bad.

Griffiths has been a landlord in London since 1998 and had not previously been subject to any enforcement action.

The court said: “He considers he is a good landlord and goes over and above his duties to help the tenants of property in challenging times including making allowances in respect of rent for repair issues and allowing for late payment of rent.”

However, it ruled that ignorance of the law was no excuse and gave him three weeks to pay up.

Read more: Complete guide to renting an HMO property.

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Shock figures show 46% of landlords cut rent during Covid

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New figures show that nearly half of all private landlords have reduced their tenants’ monthly rent payments during the pandemic.

Shawbrook Bank research found that 46% had cut tenants’ rent while 28% of them had offered a full rent payment holiday. 

Rental payment holidays lasted for an average of three months and cost landlords £7,500, compared to rent reductions which lasted four months and cost an average of £6,500.

These figures are much higher than data released by the National Residential Landlords Association last year which found that since the start of the pandemic, 6% of private renters had secured a reduction in their rent payments.

Shawbrook Bank polled 1,000 landlords, including 150 portfolio landlords, and 1,000 private tenants on their property portfolio and rental situation.

Rent reductions

More than a third of landlords who gave rent reductions said that they had proactively offered it to their tenant, while a further 45% said it was a mutual decision.

Portfolio landlords with four or more properties were more likely to have agreed a rent reduction with their tenants compared to single property landlords; 17% of portfolio landlords admitted to missing out on income compared to 12% of single property landlords.

The majority (59%) of landlords who gave rent reductions did this for more than one of their properties.

John Eastgate (pictured), MD of property finance at Shawbrook Bank, says landlords have acted pragmatically, recognising the additional strain their tenants were under.

In many cases landlords were initiating the conversation around cutting rents.

He adds: “This period has clearly underlined the critically important role that the private rental sector is playing, and will continue to play, in the UK housing market.

“Responsible landlords have shown their reliability during a crisis, understanding the changing needs of their tenants and acting quickly.”

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