Rent Arrears Increase in August
By:
Madalena Penny
A recent report by the Chartered Institute of Housing revealed that 100,000 new houses are to be built this year. Under the previous labour government it was announced that 240,000 new builds would need to be completed every year running up to 2020 to sustain the populations housing needs. The report by the CIH implies that the estimated total of new households created each year would be more than double the 100,000 new homes built.
In July this year, ministers announced that 100,000 new homes would need to be created to provide housing for the influx of immigrants alone. Andrew Stunnel, communities department revealed:
“It is estimated that net international immigration could account, on average, for 40% of the net growth of households in England over the projection period from 2006 to 2031.”
This effect of this severe shortage of housing has spilled over into the private rented sector as a major source of supply to the trending climate of tenant demand. New statistics by LSL Property Services indicates an increase in rents, with the average monthly rent reaching £686 as a result of lack of available housing stock and increasing tenant demand. While rent arrears in the PRS had seen some stability over the recent months, results from the survey show that August has seen an increase in arrear levels with 72,327 more tenants falling into arrears when compared with July.
Commercial Director of LSL, David Brown said:
“With conditions still tough for first-time buyers in terms of getting finance, in the short to medium term, renting will continue to be the preferred option for many. We wouldn’t expect rents to move back down again until mortgage products become more attractive. Until this happens, landlords remain in the position of strength.
“Rents have been rising throughout this year but they haven’t affected tenant arrears until this month. But now arrears are up – in fact they are rocketing in the North East. Tenants everywhere are only going to come under further pressure as the cuts keep coming, but it’s possible we’ll see a significant north-south divide develop. The North East is also where yields for landlords are amongst the lowest. That won’t encourage new landlords to invest there, this could mean less competition and no downward pressure on rent.”
Binder Dhillon, financial director for landlord legal network ‘Legal 4 Landlords’ advises:
“Tenants who are finding themselves falling into arrears should speak to their landlord or letting agent immediately about any possible problems. By being open and honest, a mutual arrangement can be made, thus averting long-term problems or even possible eviction.”
