I was rather shocked to read a press relesase from the national debt charity Consumer Credit Counselling Service (CCCS) yesterday, which reported that new research has shown that there are 2.9 million tenants struggling to pay their rent.
The really shocking thing though is the level of arrears. Apparently of the 200,000 odd tenants in rented property who sought advice from CCCS, those in the private sector had an average debt of £18,733. Thats a huge sum of money!
Admitedly that is not necessarily just for rent. However as the figures in the social rented sector are considerably less – averages of £14,239 for housing association tenants and £12,612 for local authority tenants, I suspect that the additional £4-6,000 arrears can be chalked up to the rental at least.
The question which springs to mind of course is, what on earth are their landlords doing to let them run up this level of arrears?
I am firmly of the view that landlords should take prompt and firm action against tenants who fail to pay rent.
Dealing with tenants in arrears of rent
If the tenant is a good tenant who has been reliable in the past, I would always recommend giving them a bit of latitude or even a temporary rent reduction. Good tenants are valuable. However, this should always be in the context of a properly negotiated and agreed payment plan.
Tenants who fail to pay altogether though, particularly those who refuse to speak to their landlord, or who just give sob stories and fail to make any effort to pay, should be served first with a possession notice, and then (if they still don’t pay) with a county court summons for eviction.
It is neither right nor fair to expect landlords to house tenants free of charge.
It is also better for the tenants if their landlords take action fast.
Often tenants will be in such a dire situation that they will simply pay the creditor who is shouting loudest. So if the landlord fails to get in touch when the tenant first falls into arrears, the tenants will just pay their more vocal creditor and allow the rent arrears to rise.
If this situation is allowed to drift, the arrears will soon reach frightening proportions. Long term there will, realistically, be no alternative to eviction for rent arrears. The only question will be, what will the level of arrears (and thus the landlords loss, as his chances of recovery will be close to zero) be at the date the tenant leaves?
What landlords ought to do
However if the landlord contacts the tenant IMMEDIATLY the rent falls into arrears (which technically will be the day after the rent falls due), the tenant will make more of an effort to make payment. Long term this will be to his advantage, as his problems will only be made worse if he is evicted.
Say for example the arrears have arisen due to losing his job. So long as he has a home, he is still in with a chance of finding another job. However the chances of this happening will drop to virtually zero if he becomes homeless.
So landlords pressurising their tenants into keeping the rent payments up, are really doing their tenants a favour.
That is a bit scary but not entirely surprising though. I just read this morning in Investor Today that rents are continuing to rise apace.
I wrote in Friday’s newsround that the current rent-fest is unsustainable and will end in tears.
From the CCCS report it isnt clear if they mean £18k rent arrears or just total debt. I cant see any landlord letting it get that far, nor any judge being very sympathetic if they do.
I see mortgage arrears of this level all the time but never rent arrears. Although a few months back Landlord Action evicted a tenant with £90k arrears I believe
Your right Ben, it could be total debt. But its still a lot of money and I bet the rent arrears will form the major part.
Shocking numbers, but not totally surprising as Ben says.
Great ideas and article!
It has to be the total unsecured debt, which includes rent. To have an AVERAGE of £18k would mean that there were lot of tenants with much higher rent arrears than that, which I think is probably not the case. Most Landlords that I deal with have arrears between £1500 and £2500.
Hi folks – CCCS has got on to me and confirmed that the figure is total debt not just arrears, so I have amended the post accordingly.
Even if it is total arrears though and not rent, it is still a shockingly high figure.
It is Tessa. Sign of the times and all that.
I regularly interview people in mortgage arrears with unsecured lonas, credit cards and the like, who have paid professional debt negotiators to whittle their monthly payment down on these debts but who still have them paying over the odds and having paid a fee for them to do it too.
If anybody is reading this be advised that credit cards know they are in a difficult position, as against secure debts like mortgages and will usually accept £1 a month from people in difficulty. I sit with my clients doing a ring around during interviews and we get these deals all the time.
If you go down on your secured loans then they get nothing anyway. They know this, we know this. Dont get a bum deal from so called debt management agencies. Stick with mainstream like National Debtline, CAB. Dont pay someone to do what you could do yourself