Recent findings by the ARLA Association of Residential Landlords seem to be giving the depressing message that hopes of declining tenant arrears may have been a little premature. It now appears that British landlords are continuing to really struggle with tenants who cannot meet their rental commitments.
55% of the landlords that the ARLA surveyed indicated that one or more of their tenants were currently in some way behind on their payments.
ARLA’s Ian Potter rightly calls this figure a cause for concern.
He notes also that this rental arrears situation has close links to the high level of unemployment we are currently experiencing. And as almost all indicators are signaling that unemployment is set to rise over the next year, respite does not seem likely.
Even though demand for rental accommodation is high at the moment, indebtedness is a problem for a lot of tenants. The worrying trend we discussed earlier in the month, of paying rent with credit cards, is hardly likely to make this situation any better. We have to prepare ourselves for the fact that rental arrears may get worse before they get better.
Potter refers to it as a web of debt and that seems an apt description. Let’s hope that the predicted rise in unemployment does not eventuate as that seems to be our best hope of avoiding arrears spiraling out of control.
