The Law of Property Act receivers claimed this also represents an increase of 4% compared to 71,483 in the previous quarter. The number of court orders to evict tenants increased 9% over the past year as landlords became less lenient.
The rise in arrears has yet to filter through to landlords, with total buy-to-let mortgage arrears cases falling by 12% over the past year.
Paul Jardine, director and receiver at Templeton LPA, said: “There’s no denying that tenant finances have been under mounting pressure in the last six months. Rents have risen consistently in the past year to a record high and the cost of living is taking its toll. This is causing many tenants on lower incomes to fall further and further behind with monthly payments. But with demand so strong for rental properties, and rental income providing the lion’s share of annual return at present, many landlords are becoming less lenient with arrears and seeking court orders to remove non-paying tenants before they themselves fall into mortgage arrears.
“The increasing number of tenants struggling to meet the monthly rent has yet to filter through to landlords’ ability to pay the mortgage each month. In part, this is down to the change in mentality of landlords, who are acting earlier to identify and resolve payment issues or remove difficult tenants before mortgage payments are affected. But with rental incomes at record highs, many landlords have taken the sensible action of setting aside slush funds or buying rental guarantee insurance – which have borne the brunt of any non-payment.
“The full impact of public sector spending cuts is yet to be felt, and rent rises are unlikely to slow in the immediate future. Tenant finances will continue to be placed under pressure, and it is crucial that landlords do not delay in contacting tenants to nip any potential payment problems in the bud as amicably as possible. Otherwise, buy-to-let mortgage arrears will begin to climb as the year progresses.”
