Rent arrears decrease post-Covid | Commercial Trust Ltd.
A sneak peek of a new rental report, due for release in full next week, reveals that the rate at which households are falling into rent arrears appears to have slowed.
Rental Industry Status
The data, a snapshot of the Goodlord and Vouch report on the state of the rental industry, was released ahead of the full report.
This shows that despite financial support such as the vacation program which ends this month, fewer tenants are in arrears.
The report is collected from a survey of 550 owners and agents and 1,750 tenants, and is compared to September 2020, the date of its last completion.
Since 2020, the number of officers reporting an increase in rent arrears has halved from 64% to 32%, with 14% reporting a decrease in arrears.
Rent arrears remain a concern for landlords, with 48% reporting no change in arrears from September 2020.
Trust of the tenant
Tom Mundy, COO of Goodlord, commented:
“The rental industry has been surprisingly resilient over the past 18 months. The pandemic has led to a sharp increase in arrears in the first 6 months, but our data and the results of this survey indicate that the pace of it has slowed significantly since last September.
“This is good news for tenants, landlords and agents as various government support programs end. The optimism displayed by tenants about their financial security is also encouraging, although the rush to new parts of the country seems to have abated for the most part!
From the tenant’s perspective, despite the fact that 24% of them have been on leave at some point in the past 12 months, they are sure to be able to pay the rent in the future. .
Only 6% of tenants surveyed say they are currently concerned about the pandemic affecting their ability to pay their rent.
The majority of tenants, 75%, believe that their income is now secure.
81% of them said the pandemic had not affected their ability to pay rent in the past year, while 4% had missed some payments or organized a payment plan.
Owner’s financial losses
Meanwhile, separate data from Simply Business pulled together the average financial impact the pandemic has had on homeowners.
47% of the 560 UK homeowners have already lost between £ 2,001 and £ 10,000 directly to the pandemic.
Almost one in three homeowners say it will take more than six months to recover from the losses.
Some believe they will have to lose property to continue housing the nation, with one in five homeowners planning to sell property to cover Covid-related losses.
Alan Thomas, Managing Director of Simply Business UK, comments:
“The impact of the pandemic has been felt in every corner of the country and it is no different for the 2.6 million homeowners who rent residential properties in the UK. The extent of this impact is clearly stated in our latest research, many landlords losing over thousands of pounds in rental income.
“So it’s no surprise that a fifth of homeowners are considering selling property as a direct result of Covid-19. Contributing to over £ 16bn a year in pre-tax spending, an exodus of small landlords from the buy-to-let market could have a devastating impact on the UK economy. But more than that, homeowners are crucial to our communities, providing much needed housing to more than 4.4 million households.
Fortunately, for the most part, landlords remain resilient – 59% of homeowners still believe the property is a worthwhile investment, while almost a third are optimistic about their future rental property.