Rent arrears climb 24% year on year as tenants struggle
The trend is not helped by the cost of rent which has outpaced salary growth by 5.2% over the past 10 years, leaving renters significantly worse-off today than they were a decade ago, says Reposit.
Average rent arrears claims climbed to £1,816 in the first quarter this year – a rise of 27% from £1,435 in the same period last year and the highest figure yet, data from deposit alternative provider Reposit has revealed.
Arrears claims rose from an average of £1,507 in January this year to £2,097 in February and hit £1,845 in March – an average of £1,816 for the quarter. But while the amount for arrears claims grew, the rate that it is increasing also slowed.
UNPAID RENT
However, during the first three months of 2024 the percentage of tenants ending their tenancy with unpaid rent increased to 18% – up from 15.3% last year.
Across the wider industry, the Bank of England announced last month that mortgage arrears jumped by 9.2% in the final quarter of 2023 and by 50% on the previous year.
Reposit’s data shows that across Q1 24, the average monthly rent increased by 10% to reach £1,108 from £1,006 in the same period last year, although rents remained static compared with Q4 23.
Ben Grech, Chief Executive of Reposit, says: “Five week cash deposits now average £1,256 and with arrears claims topping £1,800, more and more landlords are at risk of not having enough deposit to cover possible losses.
“Our data shows that in 14% of cases a five week cash deposit is inadequate against the costs incurred.”
And he adds: “Arrears also have knock-on implications too for letting agents who have to devote substantial amounts of time to resolving the claims and carrying out all the admin tasks this creates.”
OUTPACED SALARY
Elsewhere, latest research by rival deposit alternative firm Zero Deposit reveals that the cost of rent has outpaced salary growth by 5.2% over the past 10 years, leaving renters significantly worse-off today than they were a decade ago
In the past decade, the average price of rent in England has grown from £742 a month in 2014, to £994 in 2023 – an increase of £252 per month or £3,024 per year or 34% over the last 10 years.
Meanwhile, the average annual salary in England has grown from £27,919 in 2014 to £35,955 in 2023 – a cash increase of £8,036 over a decade, equivalent to 28.8% meaning that the rising price of rent has outstripped salary growth by 5.2%.
GETTING WORSE
Sam Reynolds, Chief Executive of Zero Deposit, says: “With rent prices rising at a faster rate than earnings, the issue of rental affordability is only getting worse.
“This means tenants are under increasing financial pressure in day-to-day life, but also means that the ability for them to put money aside is dwindling.
“In turn, this means that any aspirations for home ownership are served a significant blow as people have less opportunity to save for a mortgage deposit.”
