Serious Arrears have significantly decreased this quarter, Arthur investigates what this means to landlords and tenants
According to Your Move and Reeds Rains’ Arrears Tracker, serious arrears have fallen by 4% in the first quarter of 2016. Compared to Q4 of 2015, households owing my than two months of rent has decreased by 3,1oo throughout the U.K. to 86,200. This is a huge decrease from the high that serious arrears hit in Q3 of 2012, when they hit a peak of 124,800 nationwide.
The decrease in serious arrears has been matched by a decrease in the amount of eviction orders having to be served by 3%. This comes after eviction orders hit an all time high in February of this year. This is good news for landlords.
The improving statistics surrounding serious arrears have been put down to the improving job market countrywide. 44,000 jobs were added to the economy in Q1 of 2016, with the average salary offered for new jobs also increasing. These improvements have meant that many tenants are more financially secure. This has meant that arrears have been able to be paid back and tenants have been to plan for the future.
Landlords in Liverpool have got the most to smile about. Their city saw the largest jump in job growth and offered salary, meaning that arrears should continue to drop. However, Cardiff, Edinburgh and London also saw strong job growth in the first quarter of the year. With a fragile economy, these numbers may relieve some nervousness that was setting in to the hearts of landlords and property managers alike, especially as everyone waits with baited breath to see the aftermath of ‘Brexit’.
Not All Good News
As the new stamp duty laws take effect, there is the possibility that the flow of buy-to-rent houses will be stemmed. The warning signs have already begun, with a decrease in by-to-let lending by 64%. This could cause an increase in rent prices and send the amount of serious arrears shooting back up.
Despite all of this, we remain hopeful that arrears will continue to decrease in Q2. With tenants able to plan for the future, even with all the uncertainty surrounding the rental market, serious arrears will hopefully be an ever decreasing problem.
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