Tenant arrears drop

The number of tenants in arrears has dropped, according to new findings. Research published by BDRC Continental, commissioned by Paragon Mortgages, revealed that the number of void periods are falling, while the duration of the average void period is falling too.

BDRC surveyed over 1,000 landlords, over a third (34 per cent) said they had experienced at least one void period in the last quarter of 2013, compared with 36 per cent in the final quarter of last year (2013).

The average void periods stood at 59 days in the final quarter of last year, in comparison with 64 days in Q3 and 69 days in Q2.

BDRC Continental also asked landlords where they had experienced a void, how they cover the financial impact. Some 17 per cent of small-scale landlords with only one property were more likely to cover any shortfall using either their own savings, while 19 per cent funded void periods from other income.

Commenting on the findings, John Heron, director of mortgages, said: "It is good to see that void periods are less frequent and getting shorter. What is also important to note is the resilience of landlords when coping with a shortfall of income on an individual property, this provides further insight into just why the credit quality of buy-to-let lending is so much better than regular mortgages."

A quarter of all landlords (25 per cent) said they would cover it with rental income from other properties, ten per cent would look to absorb it and 16 per cent would use cash reserves that had built up while the property was occupied.

The research found that the average number of tenants in arrears remained low at around two against a portfolio size of 11 properties.

Of those landlords surveyed, 28 per cent of those surveyed said that they were concerned about rental arrears over the next year.

Published 17th March, 2014

© 2014 Estates IT Limited