Rent arrears highest in five years with London worst hit, regulator reveals

News03 Sep 2020 Former Member

Rent arrears at England’s registered providers have reached their highest level in more than five years as unemployment has risen amid the coronavirus crisis, official figures reveal.

London is the area worst hit by a recent rise in rent arrears (picture: Getty)

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Rent arrears at England’s registered providers have reached their highest level in more than five years as unemployment has risen amid the coronavirus crisis, official figures reveal #UKhousing #SocialHousingFinance

London worst affected by rent arrears following COVID-19, @rshengland data released today reveals #UKhousing #SocialHousingFinance

Following its latest quarterly survey, the Regulator of Social Housing (RSH) reported that tenant arrears in the three months to the end of June were four per cent on a mean basis. This compared to 3.5 per cent in the same period last year.

London was the worst affected. The mean average among registered providers in the capital was 5.7 per cent.

It comes after the Scottish Housing Regulator last month reported a sharp rise in landlords taking legal action over rent arrears.

The RSH’s update today also showed that voids rose to 2.2 per cent in the quarter on a mean basis, which was the highest level reported since data was first collected in 2013. The previous record high was 1.7 per cent.

The figures are based on returns from 215 registered providers across England, which each operate more than 1,000 homes.

The RSH’s update said: “The sustained period of lockdown and associated increase in unemployment has led to an increase in the arrears and void rent loss figures.”

The figures tally with a number of financial updates from landlords in recent weeks, who have reported an increase in rent arrears due to the impact of the pandemic.

Average rent collection rates were 97.2 per cent at the end of June, also the lowest level since 2013.

The number of providers reporting rent collection rates of less than 95% increased to 47, up from nine the previous quarter and 29 in the same quarter last year.

Despite the figures, Will Perry, director of strategy at the RSH, said: “The results of the quarterly survey show that the social housing sector continues to maintain a good financial position in the face of considerable challenges.”

Across the sector, a total of £107.1bn of debt facilities were in place at the end of June, with £24.8bn of that undrawn. Mote than half – £62.2bn – of the facilities were bank loans, the update showed.

Today’s figures also revealed the extent to which associations’ development plans have been affected. A total of 347 units for market sale were completed in the quarter, the lowest figure since records began. It compared to an average of 1,282 market sale units completed in each of the past three quarters.

The number of unsold market sale properties fell by eight per cent to 2,816.

However, 54 per cent of the unsold market sale stock had been unsold for more than six months, compared to an average of 38 per cent over the past three years. Four out of 10 of the units unsold over the past six months belonged to landlords in London and the South East, the figures showed.

For affordable homes, margins on sales averaged 18.3 per cent in the quarter, which was the lowest rate achieved since the third quarter of 2013/14.

Looking ahead, registered providers said they expect to spend £15.5bn on new housing supply over the next 12 months. This was 18 per cent up on the previous forecast at the end of March, but down on the pre-coronavirus forecast of £16.9bn.

The update came as Social Housing reported today how housing associations are taking stock of their development programmes in light of the current challenges.

Mr Perry added: “The next few months may mean further uncertainty due to the continued impacts of the pandemic and we expect providers to be ready to respond promptly to the changing environment, alongside maintaining services and investment, and planning for the long term.”