According to the latest research from the Association of Residential Letting Agents in the fourth quarter 2010, 40% of ARLA members reported an increase in tenants struggling to meet rental payments in the preceding six months - a rise from 35.9% in Q3 2010.
This is the first time the number has increased in 18 months, suggesting that job losses and pay cuts are beginning to take hold, causing tenants to have difficulties.
The situation was least noticeable in central London, where just under a third (27.9%) of members reported an increase, compared with the rest of the UK (46.4%).
Commenting, Ian Potter, operations manager at ARLA, said: "At the beginning of last year we predicted that the number of tenants having difficulties paying rent would increase and unfortunately this seems to be the case today.
"It is a situation which can have serious repercussions throughout the PRS as, without guaranteed rent income, landlords may also have problems paying mortgages. At worst, it may result in a rise in repossessions.
"While it is difficult for landlords to predict whether current or prospective tenants will hit financial difficulties, our research highlights the importance for landlords or agents to implement a thorough selection process and to conduct reference checks on potential tenants - and to consider the benefits of rental protection insurance.
"The same is true for anyone looking to rent a property - do your research before signing up with a new landlord. And if letting or renting a property through an agent, make sure the agent is a member of an organisation such as ARLA, which ensures landlord and tenant money is protected by a client money protection scheme. Many agents do not have this consumer protection. ARLA agents are also required to be members of an ombudsman scheme which can offer redress if things to go wrong."
ARLA's research also showed a rise in the number of tenants haggling with landlords over rents, from 44.5% to 47.1%, further indicating the financial pressures on tenants.
