Recent research by BDRC Continental has revealed that more landlord’s are complaining of rental arrears now than at any point since 2006. Over one third of buy to let owners complained that their tenants had struggled to generate rent money.
There is some regional variation in the proportion of tenants who have fallen behind on their payments. People in the West Midlands and the commuter belts of London have struggled most since the onset of the recession.
Mark Long, Director of BDRC Continental, said, ‘although there are indicators in this quarter’s research that suggest the private rental market is stabilising, it is too early to refer to this as a recovery. Britain’s private landlords still have to cope with uncertain economic conditions and arrears are at the highest level since the research began in 2006′.
The Local Housing Scheme, which came into effect in April 2008, has come under particular scrutiny recently. Landlords say that it is no coincidence that they have been seeing more people falling into rental arrears since the scheme began.
Government money is passed directly to the tenant to be used as rent money under the terms of LHA. However, a number of tenants have not used the cash for its intended purpose.
Mr Long said, ‘One in four of the landlords we surveyed have tenants on LHA, and they are much more likely to be in arrears’.
‘Landlords are telling us that the new system of direct payments to tenants is the key barrier to them offering tenancies to people in receipt of LHA’, he continued.
Anybody currently in receipt of LHA is warned that this source of income may well be cut off, as the government is seeking means of dealing with the budget deficit. There has been a huge increase in the amount of money that is being claimed under the scheme in recent times. The figure for 1998 was £11bn and by 2008-2009 this had climbed to £17.4bn. The amount of money that is claimed is expected to rise further still over the next couple of years, as the rate of unemployment continues to rise.
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