Newly released data from Reposit, an FCA-regulated deposit alternative firm, has unveiled a sharp increase in rent arrears during the last quarter of the previous year, highlight tenant financial struggles in worsening economic conditions.
The statistics show a dramatic rise in the value of rent arrears claims, which escalated from £1,344 in October to £2,108 in November, and remained high at £1,954 in December. This period also saw an increase in the proportion of tenancies ending in arrears, rising from 13.7% in September and October to 15.8% in November and December.
Notably, December 2023 saw rent arrears claims jump by 50% compared to December 2022, a stark contrast to the modest 4% rise in rental prices over the same timeframe. This surge aligns with broader economic challenges, evidenced by rising defaults on mortgages and credit card payments, highlighting the broader impact of the cost of living crisis on tenants’ financial stability.
Rightmove’s trend tracker has identified a pivotal moment in tenant affordability, with a reported 23% of rental properties seeing advertised rents slashed, pointing to the acute financial distress tenants are experiencing.
Ben Grech, CEO of Reposit, commented on the situation, stating, “The increase in rent arrears is obviously reflective of tough times for tenants, but this naturally has a knock-on effect for landlords, who are facing their own challenges with Renters Reform and higher mortgage rates. It’s clear that tenants need a better option to relieve their cash flow burden, while landlords need greater cover in the event of arrears – we already know that a 5-week cash deposit is insufficient in 14% of cases.”
Grech further noted the additional pressures this situation places on letting agents, including increased administrative tasks, disputes, and delays due to rising arrears.
Reposit is determined to tackle these issues by offering a solution that not only aids tenants in managing their finances more effectively but also provides landlords with essential protection against the growing issue of rent arrears. Their insurance-backed product offers landlords up to eight weeks of coverage for rent arrears and property dilapidations, ensuring landlords are safeguarded while offering tenants a more manageable financial arrangement. Reposit operates with independent authorisation and regulation by the FCA.
