Rent arrears are probably the worst nightmare for most landlords as they present the immediate issues of both a halt in cash flow and the spectre of possible action being required to remove a tenant and try to regain any monies unpaid. However, the Money Advice Trust, a UK charity, revealed at the end of last year that rent arrears are now the fastest rising cause of debt in the country, a statistic that will no doubt cause many landlords a number of sleepless nights.
Redundancies, ongoing cuts to benefits and free public services such as legal aid, as well as the general effect of the financial crisis have all clearly played a part in the increase in the number of people now struggling with their rent. According to The Money Advice Trust, the number of calls received by its national debt helpline coming from people who are unable to pay their rent has risen significantly since 2007.
The statistics showed that in 2013, from January to October, 20,000 calls were made to the helpline from those who were seeking assistance in order to deal with rent arrears. The figures for 2007 were just 8,000, almost two thirds less. In the past two years calls received by the helpline relating to debt resulting from rent arrears have increased by 37% and between 2012-2013 the rise was 13%. When this is compared to the statistics for other types of debt in the UK the increase in rental arrears debt tops them all. Renters in general now make up over half the calls to the debt helpline, which is in contrast to the figures for 2010 when they made up 43%.
According to the chief executive of the Money Advice Trust, Joanna Elson, “The long-term trend for rising rent prices is clear and its impact on the debt landscape is significant. Rent arrears are now the fastest growing debt problem we help people with at National Debtline, and we are in danger of falling into a rent debt crisis.”
So, the threat to the wider economy from issues suffered by landlords whose tenants fall into rent arrears is very real. According to the charity Shelter, rent arrears can perpetuate a cycle of debt and homelessness, which indicates that this is an area that really needs some attention if we are to avoid a debt arrears crisis.
For landlords with expenses to meet – the mortgage to pay, bills to settle – this is a very worrying development. It is clearly important to vet tenants first in order to try and determine whether or not rent arrears are likely to arise as an issue, but often this cannot be predicted. For those who are very concerned it is often a good idea to request a guarantor for a tenant’s rent before the tenancy agreement is signed. However, where there is already a situation in which rent arrears exist the key is not to let this go unremarked. As soon as a rent payment is missed a landlord should raise this with the tenant and, if necessary, once the two month point passes, take action to remove them. Whilst the prospect of evicting a tenant can be intimidating, the longer the situation continues the worse the outcome is likely to be.
If you need help and advice evicting a tenant then feel free to call a member of our team. We offer fixed fee eviction packages