Rent Arrears Up 200% Within Two Years
The economic downturn and the recent recession have taken its toll on people living all over the world. Due to this unexpected onslaught and other uncertain economic factors it has been reported that rent arrears in the UK are up by 200% in just a span of two years, even in very disireable locations, such as Islington flats and houses for rent. The reasons for this sudden rise are attributed to pay cuts and the rise in unemployment after the economic crisis hit the nation. Recent surveys have shown that around 34% of private landlords have complained of tenants falling behind with payments in the past two years.
The situation means very bad news for landlords but tenants are happy as landlords are not currently increasing their rents and are thinking twice about a raise. Landlords are not happy and they are partially blaming the implementation of the new Local Housing Allowance for the rise in rent arrears. The landlords in the areas of East Midlands and the commuter belts of the suburbs of London are the worst hit. This housing scheme was implemented by the government to replace housing benefits two years ago, and subsequent to its implementation landlords all over the UK were facing rent arrears.
Landlords are not happy with the above scheme because it lays down a standard rate and not a separate rate for an individual property. This scheme was implemented with the sole objective to prevent landlords from overcharging. The cash under this scheme is paid to the tenant and not the landlord. Many landlords have complained that their tenants have not passed on this rent allowance to them. This has made it difficult for landlords to consider offering new rentals to those who need them.
Possible new rent restrictions may mean that private landlords will be are unable to change what they charge for rent as they see fit. I fact the disparity between rents in the private and social housing may lead to rents tending towards parity.
It is expected that this increase in rent arrears will continue for another two to three years due primarily to the present economic situation that rules the country. Until things in the economy changes for the better landlords may end up taking drastic actions.