The number of tenants over two months in arrears increased by 13% in Q2 2011 compared to the same period in 2010, research by Templeton LPA reveals.
There were a total of 74,492 tenants in arrears of more than two months in England and Wales in Q2, up by 4% compared to Q1.
The number of tenancies in arrears of this size now represents 2.1% of all properties in the private rental sector in England and Wales.
Furthermore, the research shows that 24,170 tenants faced eviction notices in Q2, an increase of 5% on the previous quarter and of 9% on Q2 2010.
Paul Jardine, director and receiver at Templeton LPA, puts the increases down to rising rents.
He says: “There’s no denying that tenant finances have been under mounting pressure in the last six months. Rents have risen consistently in the past year to a record high, and the cost of living is taking its toll.
“This is causing many tenants on lower incomes to fall further and further behind with monthly payments.”
But Jardine points out that with demand so high for rental properties, many landlords are becoming less lenient with arrears and seeking court orders to remove non-paying tenants before falling into mortgage arrears themselves.
The research shows that the increase in tenant arrears has not yet fed through into buy-to-let mortgage arrears – the number of buy-to-let mortgages more than three months in arrears fell by 8% in Q2 compared to Q1.
Jardine adds: “The full impact of public sector spending cuts is yet to be felt, and rent rises are unlikely to slow in the immediate future.
“Tenant finances will continue to be placed under pressure, and it is crucial that landlords do not delay in contacting tenants to nip any potential payment problems in the bud as amicably as possible. Otherwise, buy-to-let mortgage arrears will begin to climb as the year progresses.”