Increase in Unpaid Rent Arrears at the end of tenancies

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rise in unpaid rent arrears at end of tenancy

Tenancies ending with unpaid rent arrears of more than five weeks’ rent have leapt to 17%, new research reveals.

The findings from deposit alternative platform Reposit show that landlords needed to reclaim at least five weeks of rent to cover costs such as arrears or damage.

Increasing problem

This figure rose 4% from a previous average of 13% last year.

Reposit examined its own data from tenancy agreements that have come to an end during 2024.

So far this year, Reposit found 49% of agreements ended without any costs incurred by the tenant.

Ben Grech, CEO of Reposit, says: “The figures highlighted how cash deposit schemes did not always provide landlords with the right level of protection because they were capped at 5 weeks’ worth of rent.

“Our figures show cash deposits are now inadequate across a significant portion of the market and one which is growing, most likely caused by the cost of living crisis.”

Average Unpaid Rent Arrears rise

Earlier research from Reposit, showed that average rent arrears claims climbed to £1,816 in the first quarter this year – a rise of 27% from £1,435 in the same period last year.

Arrears claims rose from an average of £1,507 in January this year to £2,097 in February and hit £1,845 in March.

And during the first three months of 2024 the percentage of tenants ending their tenancy with any unpaid rent increased to 18% – up from 15.3% last year.

Elsewhere, research by rival deposit alternative firm Zero Deposit revealed that the cost of rent outpaced salary growth by 5.2% over the past 10 years.

Debt Collection for Unpaid Rent Arrears

Tackling the challenge of Unpaid rent arrears is not straight forward. It can be notoriously difficult to recover. Once a tenant has moved on, a forwarding or new address may not always be supplied.

This leaves landlords and agents with little option but to seek professional help in recovering their lost funds through debt collection.

One of the main reasons for unpaid rent arrears is that tenants may have suffered a change in circumstances, such as loss of employment or unexpected expenses. In these cases, it is important for landlords and agents to communicate openly and try to come up with a solution that works for both parties.

However, there are also cases where tenants purposefully withhold rent, causing financial strain on landlords and jeopardizing their ability to maintain their properties.

In these situations, it is crucial for landlords and agents to take action quickly in order to minimise losses.

Debt collection services can provide assistance in pursuing unpaid rent arrears from tenants who have moved on.

Tracing a former tenant can be a difficult challenge in itself however. Tracing a tenant to a new address is often the first hurdle.

Unpaid rent arrears is sometimes easier to write off but it really depends on the amount. Obviously if the unpaid rent arrears run into thousands of pounds it can often be a worthwhile exercise.

Every situation is different and it depends on the tenants financial circumstances also and if they have a regular income.

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