Data from letting agents Your Move and Reeds Rains found that 86,200 tenants in the UK were more than two months behind in rent in the first quarter of 2016, a 4% drop from the 89,300 in that position in the previous quarter.
The estate agents’ study also shows that there has been an average of 92,600 tenants in serious arrears in the first quarter of the year since 2008, with Q1 2016 well below that figure.
Adrian Gill, director of Your Move and Reeds Rains, said the reason for the drop was due to a healthier jobs market.
“With an extra 44,000 jobs created in the first quarter of this year, thousands of tenants have been able to get their finances back on track and pay down late rent,” said Gill.
Serious rent arrears peaked in Q3 2012, when 124,800 households owed more than two months’ rent and UK unemployment stood at 7.9%, the report said.
“The massive growth in the number of homes available to rent – driven by both deliberate landlords and accidental landlords coming into the market – has ensured that rents have not outpaced the ability of tenants to pay,” said Gill.
“The affordability of renting and the number of tenants falling behind on rent also needs to be seen within the context of the rapid expansion of the private rented sector and the addition of millions of extra houses and flats to rent.”
The number of eviction orders issued has also dropped considerably. In Q1 2016, there were 26,230 court orders made for eviction as a result of possession claims by landlords in the county courts , down from 26,964 in Q4 2015.
As a result of the drop in tenant arrears, landlords are less likely to fall behind on their mortgage payments, the study found.
In Q1 2016, 9,300 buy-to-let mortgage arrears of more than three months were seen, down 9.7% on Q4 2015 and the lowest level since Q4 2007.
“The evidence is clear; landlords’ finances are the healthiest they’ve been for nearly a decade,” said Gill.
“Back in 2009, with a distressed purchase market, many owners didn’t want to sell their properties if they inherited or no longer wished to live in their old home – which led to more accidental, DIY landlords. As a result of this, and with more tenants in financial difficulties, buy-to-let mortgage arrears were far higher.
“Since then the private rented sector has changed. Now, with the rise of deliberate landlords with a professional attitude to their investment, the average property investor is more likely to have a business plan and a more professional approach to letting their property.”
However, Gill warned that if landlords are held back from buying property due to the Stamp Duty surcharge, a shortage of homes to rent could push prices up and drive more tenants into arrears.