Nearly 100,000 private tenants are now more than two months behind on their rent, according to figures published today.
During the second quarter of 2013, the number of tenants in severe arrears rose by 3.3% (to 98,000) on the previous three months, LSL Property Services reports.
Those in serious arrears now represent 2.4% of all tenancies in England and Wales, up from 2.3% in the previous quarter.
On an annual basis, the number of tenants in severe arrears has shown a slight improvement, falling in absolute terms by 2.9%. However this still leaves the figure over the last 12 months at 20% above the long-term average.
There was, however, a wider improvement in tenant finance. According to LSL’s latest Buy-to-Let Index, overall tenant arrears fell in May, with 8.2% of all rent late or unpaid. This compares with 8.4% in the previous month.
Paul Jardine, director and receiver at Templeton LPA, said: “Tenants as a whole have already shown great resilience to set-backs, and we expect the proportion of all rent in arrears to halve between 2008 and 2018. But a troubled minority is feeling the pinch most sharply.
"Slower rent rises in the last couple of months have provided some relief. However, the longer-term battle is with other forms of inflation, plus unemployment and anemic wage growth. Consumer inflation is persistently outpacing the Bank of England’s target, and escalating much faster than either rents or wages.
“If 2013 isn’t another false economic dawn then the financial position of these struggling tenants could start to improve later in the year. But tenants in severe arrears will be among those squinting the hardest to glimpse the light at the end of the tunnel.
"Whether the recession included a single, double or triple dip makes very little difference – there are a growing block of tenants who can’t keep their heads above the rising tide of inflation and weak wage growth. Until the rising cost of living begins to subside, the number of tenants in severe arrears is likely to mushroom even further.”
Reflecting a growing minority of tenants experiencing serious financial strain, the number facing eviction through court order has also grown.
In the first quarter of 2013, 28,473 tenants faced eviction notices, a quarterly rise of 4.9%. This puts evictions at the highest level ever recorded, beating the previous record set only in the last quarter. Evictions in Q1 were 9.4% higher than the same period last year.
Paul Jardine continues: “Most tenants are paying down their debts. However, landlords are absorbing a stream of severe arrears from a minority of troubled tenants. Given that this situation has been mounting for some time, more landlords know the process and the most constructive approach to take.
"Frequent and honest communication between everyone is essential. That matters all the time, but if any issues arise then everyone should understand all their options as early as possible.”