Average Outstanding Rent Reaches Four-Year Low

Thousands of private landlords across the UK were the silent victims of COVID-19’s economic impact on the country. With millions suddenly facing the prospect of not being able to pay their rent, landlords found their income severely or completely drying up.

Consequently, countless buy-to-let landlords fell into arrears with their own lenders as their tenants stacked up what, in many cases, proved to be insurmountable debts.

Thankfully, it is looking like there is at least a little light at the end of the tunnel for landlords and tenants. According to the latest figures published by Paragon Bank, there was a major decline in the number of private tenants in arrears by the halfway point of 2021.

Specifically, the figures indicate that buy-to-let landlords in the UK had an average of 1.3 tenants with outstanding rent payments at the end of the second quarter. This equates to the lowest number of tenants in arrears since the first three months of 2011.

The figure had previously stood at 1.6 tenants with outstanding rent on average in Q1, which was also significantly down from the 2.1 average recorded in the second quarter of last year.

In monetary terms, the data published by Paragon Bank suggested that the average amount of outstanding rent had fallen to £1,781 in the second quarter of this year, down from £2,376 during the first quarter. This represents a reduction of £595 and is the lowest figure recorded in four years.

Signs of an improving economy

Positive movement like this provides reassurance of relatively early signs of economic improvement, benefiting both the private renting community and BTL landlords across the UK. The survey, which took into account the financial situations of around 750 landlords, found that 18% had received requests for rent payment holidays from their tenants.

A huge 36% had received at least one request from a tenant looking to change their monthly rent obligations, while 14% had asked for their rent to be reduced by as much as 20 per cent.

The vast majority of landlords reached agreements with struggling tenants to enable them to continue making payments and keep living in their homes. Approximately 36% said that they had agreed to change the rent obligations of their tenants in some way due to difficulties encountered during the pandemic.

The figures published by Paragon Bank also indicate that requests for rent changes, holidays, and reductions are also on the decline and have been for several months. Compared to the same time last year, landlords are receiving, on average, 7% fewer requests to amend or suspend rental payments from their tenants.

Experts are warning the BTL community that there may be further turbulence ahead, should it be necessary for the government to impose further restrictions throughout the autumn and winter of 2021–2022.