More landlords taking action against tenants in arrears
Court orders to evict tenants rose by 11% in 2011 as landlords took a firmer stance against late payers.
Figures released by the specialist receivers, Templeton LPA, also show that the number of tenants in “severe arrears” of more than two months rose by 18% last year to 78,970.
That’s the highest level since the third quarter of 2008.
Paul Jardine, director and receiver at Templeton LPA, said: “The soaring cost of renting has created a two speed market. The overall tenant population has coped relatively well with rising rents and soaring living costs, with total arrears actually down year on year in November. But a growing minority of renters are falling deeper and deeper into payment difficulties, and the number of severe arrears cases is rising.
“While the wider tenant mix has changed since the mortgage market downturn with a greater number of financially sound yet frustrated first time buyers, a growing number of tenants are seeing their job prospects affected by theUK’s economic malaise.
“As a result, many landlords are being less lenient with tenants facing initial payment problems and are looking to use court orders to replace tenants quickly in anticipation of finding a financially sound substitute and potentially an increase in rent.”
Mr Jardine said that so far, rent arrears had not led to severe mortgage arrears for buy to let landlords, but that could change if the economic climate does not improve.
“We expect that mortgage arrears will climb. Given the economic challenges theUKfaces, and the worsening labour market, we anticipate that both overall arrears and severe arrears will rise in 2012 – and this will feed into increased tenant evictions and hamper a growing number of landlords’ ability to meet their monthly mortgage costs.”
Please contact Matthew Melling for more information about the issues raised in this article or any aspect of commercial property law.