New reports suggest that the Christmas period proves detrimental to landlords, with tenants going overboard on their spending without budgeting for rent payments, leading many to fall into arrears.
The introduction of the new Universal Credit scheme and rising rent prices were thought to be the main problems facing the private rented sector, with concerns over rent arrears. However, as David Newnes, director of LSL Property Services notes, the Christmas period can also lead to a lot of missed payments.
As he explains: “December always sees a step backwards and last month was no exception. In the absence of real salary increases in 2012, the additional burden of higher rents was met by tenants cutting back on other essentials. But over December, the month’s extra spending has led to many more falling behind again. In longer terms, with rents likely to rise, falling arrears will be tied to the labour market moving forwards, rather than retreating.”
Christmas Causes Increase in Rent Arrears
Newnes’ comments indicate the importance of landlords investing in efficient rent insurance during the next few months. His comments come hand in hand with alarming figures, that suggest unpaid rent for December in England and Wales accounted for just over 10%, or £326 million. This was a large increase from £241 in November.
Chief Executive of housing charity Shelter, Campbell Robb says: “With the rising cost of living, wage freezes and rents remaining high, it’s not surprising that rent arrears are at their highest for a year. This time of year is particularly for many families as bills coming in from Christmas take their toll on finances already stretched to breaking point.’
Chief executive of housing charity Shelter, Campbell Robb says, ‘with the rising cost of living, wages freezes and rents remaining high, it’s not surprising that rent arrears are at their highest for a year. This time of year is particularly difficult for many families as bills coming in from Christmas take their toll on finances already stretched to breaking point.”
More causes for concern for landlords comes with the news that rents actually fell by 0.9% on average in the UK in December 2012. Mr Newnes, however, is not convinced that the drop in prices will last. He says: “Rent prices may have returned to August levels but it is a seasonal blip rather than an about-turn in the market. Tenants were in a stronger bargaining position as landlords reduced rents to fill empty properties in the slower winter months, yet the underlying weakness in the mortgage will mean competition will heat up once more.”