Evictions up as rents hit record high ~ Debt Managements and Consolidation

The number of court orders to evict tenants has risen by 9 per cent in the last year, as landlords’ crackdown on unreliable tenants.

There has been a substantial increase in the number of tenants receiving court orders, facing eviction as they are unable to keep up with monthly rental payments. With the surge in demand for rental properties, landlords have become less lenient with tenants who fail to meet their rental commitments. According to research conducted by Templeton LPA, the specialist practice of LPA Receivers, the number of tenants in severe financial difficulty has risen significantly since the last quarter, with nearly 8,700 more tenants over two months in arrears. In the second quarter of this year, 74,492 tenants in England and Wales were in severe arrears – a 13 per cent increase compared to the same period in 2010. This also represents an increase of 4 per cent compared to 71,483 in the previous quarter. Nevertheless, tenancies in severe arrears represent just 2.1 per cent of all properties in the private rental sector in England and Wales. The growth in tenant arrears has been mirrored by a rise in the number of tenants being evicted through court orders. In the last quarter, 24,170 tenants faced eviction notices – an increase of 9 per cent on the 22,091 a year ago. But the change is not just annual. In quarter one of 2011, there were 5 per cent more than in the last quarter of 2010. Paul Jardine, Director and Receiver at Templeton LPA, said: “There’s no denying that tenant finances have been under mounting pressure in the last six months. Rents have risen consistently in the past year to a record high, and the cost of living is taking its toll. This is causing many tenants on lower incomes to fall further and further behind with monthly payments. But with demand so strong for rental properties, and rental income providing the lion’s share of annual return at present, many landlords are becoming less lenient with arrears, and seeking court orders to remove non-paying tenants before they themselves fall into mortgage arrears”The increase in tenant arrears and evictions has not yet fed through into buy-to-let mortgage arrears. In the last quarter, the number of buy-to-let mortgages more than three months in arrears actually dropped by 8 per cent compared to the previous quarter. However, at 29,400 there are still nearly three times as many buy-to-let mortgages in severe arrears compared with three years ago. The mentality of landlords has shifted, with them dealing more swiftly with late payees, to avoid getting into financial difficulty themselves. Paul added: “The full impact of public sector spending cuts is yet to be felt, and rent rises are unlikely to slow in the immediate future. Tenant finances will continue to be placed under pressure, and it is crucial that landlords do not delay in contacting tenants to nip any potential payment problems in the bud as amicably as possible. Otherwise, buy-to-let mortgage arrears will begin to climb as the year progresses.”
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