Rent Arrears Increase £56 Million on 2009

Latest Landlords News By: Madalena Penny

Rent arrears soared in December by a further 2% up on November, increasing the national figure to 11.7%, according to research by LSL.

The increase has been blamed on housing benefit being paid direct to the tenant and in a number of cases it has not been passed onto the landlord.  The British Property Foundation (BPF) is claiming the LHA payment policy, which was introduced in 2008 is responsible for landlords withdrawing residential property from claimants of housing benefit.

I n a statement Policy Director of the BPF, Ian Fletcher said:
“The government persists with a policy that was designed to empower local housing allowance claimants, but the truth remains that millions of pounds of taxpayers’ money is being wasted and not finding its way to the landlord.”

Lobbyists within the private rented sector have campaigned for the re-instatement of housing benefit to be paid once again direct to the landlord, which was a pre-election promise by Conservative ministers, should they become the next government at the general election.

Legal 4 Landlords announced in December that an increase in rent arrears was a likely scenario due to tenant temptation brought about by Christmas financial commitments.  The landlord legal eagles are concerned that the government are holding back on their promise to return direct LHA payments to landlords as a bargaining tool in the future to induce landlords to lower rents.

Up to the end of 2009, there was thought to be in excess of £220 million in rent arrears and 675, 000 LHA tenancies.  The latest LSL buy-to-let index indicates £276 million in rent arrears at the end of 2010, and it is thought that there are now 993,000 LHA tenancies.

Managing director of LSL property services, David Newnes said:
“Tenants have been under steady pressure in recent months. Arrears have been rising since October as public sector spending cuts start to bite in many areas of the country. With unemployment set to increase this year, and rents likely to rise once more in the spring, more tenants will be at risk of falling behind with rent payments.”