Strong year end for landlords

After severe tenant arrears rose by an average of 10.8% per quarter for the first three quarters of 2012, the final quarter of the year saw a fall of 15.6%.

According to the latest Tenant Arrears Tracker by Templeton LPA, the specialist practice of LPA Receivers, and part of LSL Property Services plc. the number of tenants in severe arrears fell by 16,000 in the fourth quarter to 86,000.

This is the lowest level since Q4 2011 and leaves the level of severe arrears cases 9.2% lower than the average for the previous four quarters.

Despite this positive sign on an annual basis evictions are on the increase, up 0.25% from a year ago.

Paul Jardine, director and receiver at Templeton LPA, said: “Tenants’ finances have suffered a grueling combination of rising living costs and rental inflation throughout much of 2012.

"With many budgets balanced on a knife edge, a slight reprieve from rapid rent rises towards the end of the year has been very significant.

“But the recent strength of the labour market has played the biggest role in halting the upwards climb in the number of tenants in severe financial difficulty.”

David Brown, commercial director of LSL Property Services, commented: “More investment in the private rented sector is needed. Thankfully strong tenant demand and yields are tempting more people to invest in the sector and existing landlords to expand their portfolios.

“But investors should place financial suitability of any prospective tenant high up their agenda when letting a property.

“Cutting corners at the point of vetting a tenant is a false economy, and can prove costly. It is far easier to take action to prevent arrears in the first place, than to resolve them after they have occurred.”

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