The total number of tenants in serious rental arrears fell by 9% over the last 12 months, according to the latest Tenant Arrears Tracker by estate agency chains Your Move and Reeds Rains.
In absolute terms, those more than two months behind on their rent now total 65,200. This compares to 71,700 tenants at least two months in arrears in the same period last year, or an annual improvement of 6,500 households who no longer face the potential threat of losing their home.
As a proportion of all tenants, those in serious arrears of more than two months have also improved, standing at just 1.4% in Q3 2014, compared to 1.6% of all tenants in Q3 2013.
Improvements in the most serious rental arrears also tally with the latest figures on overall levels of late rent, including shorter lapses on payments. According to LSL’s latest buy-to-let index, overall tenant arrears of any duration now stand at just 7.2% as of September 2014, down from 8.5% in September 2013.
David Newnes, director of estate agents Your Move and Reeds Rains, said: “The private rented sector has mustered enough new capacity to meet, in part, the growing demand for affordable housing, through the greatest economic depression in modern times. This isn’t just about those relatively prosperous households forced to put ownership plans temporarily on hold. For many thousands of others, with far tougher monthly budgets, private tenancies have also provided a lifeline. For many renting is now their chosen route as it provides flexibility and mobility.
“Gradual rent rises, on a par with inflation, have helped. But now a bigger turnaround appears to have happened. For many years more momentary cases of rent arrears have been in decline, yet it’s only recently that the most serious cases – where families could actually lose their homes – are following suit.
“One explanation is the improving jobs market, with the improvement in unemployment constantly outperforming expectations. Wages would however need to rise faster for most households to feel the full effects of economic recovery. Reduced unemployment levels would seem to be far more beneficial for those households who are struggling the most.”
Improved tenant finances have now started to be reflected in eviction rates. In the latest data, for the second quarter, 27,700 tenants faced a court order for eviction – down by 16% compared to just three months earlier when the number of tenants potentially facing eviction stood at 33,000.
On an annual basis, this leaves the number of eviction orders 0.5% lower than in Q3 2013 – representing the first time eviction rates have fallen on an annual basis since Q2 2010.
Meanwhile, landlords have also benefitted from healthier tenant finances. Landlords’ own arrears on buy-to-let mortgages saw further progress in the latest available data, in the seventh consecutive quarter of improvements.
The total number of buy-to-let mortgages over three months in arrears is now at almost the same level as was seen before the UK entered recession. As of Q2 2014, this figure now stands at 13,400, compared to 13,300 in Q2 2008. This is 8.8% lower than the 14,700 such cases in the first quarter, while on an annual basis buy-to-let mortgages in arrears have improved by 25.1%, down from 17,900 in arrears of more than 3 months in Q2 2013.
Newnes said: “Plenty of landlords have had their own financial problems, but after astonishingly steady progress these issues have almost entirely been consigned to the past.
“This isn’t just good news for those with an investment property to support their pension plans. When landlords have a healthier cash flow tenants are less likely to see rapid rises in market rents. There are also more new homes coming onto the lettings market now, as the era of landlords struggling with their mortgages seems to be behind us, at least for the time being.”