An increase in rent prices during January 2012 signalled high rental arrears during the month, affecting those in the debt management sector.
According to the latest BTL index from LSL Property Services – who own the UK’s largest lettings agent network – the average BTL rent in England and Wales rose by 0.1 per cent to £712 per month. Annually, this can be worked out as a £30 rise in average monthly rent as rental inflation rose yearly from 4 per cent in December to 4.3 per cent in January.
Kevin Still, Director of Atlantic Financial Management, commented on the index: “Rent arrears remain a priority expenditure and my experience of clients looking at a managed debt solution is that over 15 per cent of the tenants we see have early stage rent arrears, owing in excess of £1,200 that would need to be re-scheduled ahead of repayments to unsecured creditors.”
The high levels of rent arrears in January saw 10.7 per cent of all rent late or unpaid at the end of the month. Furthermore, unpaid rent rose slightly compared to December 2011 – an increase from £300.2 million to £300.3 million in one month.
Research from Paragon Mortgages highlighted that more than a third of intermediaries saw an increase in their buy-to-let business in Q4 2011. This worked out as an average increase of 4.5 per cent in the fourth quarter. John Heron, Managing Director of Paragon Mortgages, said: “With record levels of rental demand being reported it is good to see that existing landlords are increasing the size of their portfolios but it is particularly notable that the proportion of new landlords is also increasing.
“If these trends are maintained through early 2012 it would seem that the broad expectation of a further expansion of the buy-to-let market in 2012 is well-founded.”
Kevin added: “As a debt solution provider, working with landlords and residential letting agents (RLAs) is important and many landlords/RLAs simply want to ensure that the rent continues to be paid whilst rent arrears are cleared over a sensible repayment period rather than evicting the tenant.”
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