The pandemic has been a worrying time for some landlords. But as the UK emerges from lockdown, what is the picture across the UK when it comes to arrears and what might the future hold?
Throughout the pandemic, property management software company PayProp has been studying tenant arrears. Its latest report, covering the period of the pandemic, has some interesting reading.
According to PayProp:
“Our analysis presents mixed results: the good news is there are fewer tenants in arrears than at the height of the pandemic, but the amount owed by those in arrears is significant – and increasing.”
By the end of 2021’s first quarter, UK tenants owed an estimated £728 million in rent arrears. The money is owed by 11.4% of tenants – a fall from the UK’s arrears highpoint of spring 2020, when the figure was 13.4%.
Says the report:
“We can credit a combination of wide-ranging support and many businesses adapting to the ‘new normal’ with enabling the majority of tenants to meet their financial obligations. Rent has continued to be paid in full by some, while others have managed to pay back a portion of arrears.”
Regional data shows that London tenants owe the most at £277 million, equivalent to 38% of total rent arrears across the UK. This isn’t surprising, given that London has more tenants than anywhere else, coupled with higher rents.
Across England, 27,807 households owe more than six months’ rent, placing them at risk of eviction. Again, because of the number of tenancies, Londoners account for more than 44% of this group.
But PayProp doesn’t believe that the level of arrears will lead to large numbers of buy-to-let repossessions. According to data from UK Finance, which represents over 250 banks, only 550 properties were repossessed during the last three quarters of 2020, which is less than in quarter one of 2020 – before the pandemic.
“How all of this plays out over 2021 will depend on the strength of the economy to sustain the jobs that are currently furloughed,” says the report. “If the economy recovers and tenants can go back to work, earn a full salary and service any arrears they have built up during the pandemic, we expect to see a gradual reduction in both the percentage of tenants in arrears and the amount they owe. Given the flexibility the government has shown over 2020, we don’t expect their support programmes to end before the economy is able to support those jobs.”
Kubie Gold Associates are an independent local firm of estate agents specialising in the Rental, Sale and Property Management of Residential Property in the North-West and Central London market
