160121 Tenants in severe arrears
  • Another form of indebtedness… Earlier today, I wrote about our indebtedness as individuals, not just as a nation. That indebtedness takes many forms. The estate agent group LSL Property Services, I recently discovered, collects statistics on the number of people in Britain who have slipped into severe arrears on their rent. Which is to say, the number of people who are at least two months behind with their rent payments.
  • …and its rise. The above graph shows the path of this sorry metric since the beginning of 2009. It reached its peak, of 116,600 tenants in severe arrears, in the third quarter of 2012, from where it has since declined. But here’s the thing: it has started to climb again. The latest total, of 84,200 in the third quarter of 2015, is 10,200 higher than the previous quarter’s total, which was 3,100 higher than the previous quarter’s total… and so on. We’ve now had a year of continuous increases.
  • Part of the cause. What has caused this? Part of it is simply that there are now more people renting from private landlords than ever before, so there are more people to fall behind on their rent. Beyond that, it’s mostly just suppositions. These individual tenants’ financial circumstances could be worsening, but we cannot be sure without knowing what their financial circumstances are.
  • A happier statistic. There is better news elsewhere in the statistics. LSL also track the number of tenants who are getting kicked out of their accommodation – and, despite the rising arrears, this is actually declining. There were 26,712 court orders for eviction issued in the third quarter of last year, after seasonal adjustments are made, which is 7.8 per cent lower than a year before.
  • An unhappy ending? But let’s not celebrate just yet. Even with the decline in evictions, even if the rising number of tenants in severe arrears is explained wholly by the rising number of tenants, there are clearly still lots of people who are struggling to get by. Many of the rest of us will be okay when interest rates eventually rise from record lows to almost record lows. But what happens if you’re already at breaking point?

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