The specialist chartered surveyor’s research showed that the number of tenants facing eviction notices increased to 24,170 in the second quarter, as landlords become less lenient.
Rents have hit record heights recently. However, while tenant arrears were up 4% on Q1, tenancies in severe arrears represent just 2.1% of all properties in the private rental sector in England and Wales.
In addition, Templeton LPA found that arrears have not yet fed through to buy-to-let mortgage arrears, in part due to landlords acting more quickly to remove non-paying tenants.
Figures showed that buy-to-let mortgages more than three months in arrears fell 8% to 29,400 in Q2 compared to the previous quarter and were 12% down over the past year.
Nevertheless, Templeton LPA noted that there are nearly three times as many buy-to-let mortgages in severe arrears compared to three years ago.
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.”
He said that landlords are becoming increasingly less lenient of arrears in the face of strong demand for rental property and the majority of their annual return coming from rental income.
Jardine added: “With rental incomes at record highs, many landlords have taken the sensible action of setting aside slush funds or buying rental guarantee insurance – which have born the brunt of any non-payment.
“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.”
