The number of tenants in severe financial difficulty climbed by 10.2% in the first quarter of 2012, with nearly 8,800 more tenants over two months in arrears than in the last quarter of 2011, according to the latest Tenant Arrears Tracker by Templeton LPA.

In Q1 2012, an average of 94,400 tenants in England and Wales were in severe arrears – an increase of one fifth compared to the same period in 2011. At the current rate of growth, the number of renters facing arrears greater than two months will climb above 100,000 in the next quarter.

Despite the increase, tenancies in severe arrears represented 2.4% of all properties in the private rental sector in England and Wales in the first quarter of 2012.

Although severe arrears cases (tenants with arrears of more than two months) continue to climb, overall tenant arrears have improved, with 9.3% of all rent late or unpaid by the end of February, a decrease from 10.7% at the end of 2011.

Commenting on the data, Paul Jardine, a director and receiver at Templeton LPA said: “While the general tenant population has absorbed the rising cost of renting in the last two years, a minority of tenants are facing severe financial difficulties –a minority that is growing. These tenants have been pushed into deeper and deeper arrears by a combination of rising living costs, high rents and a weak labour market, and are now months behind with the rent cheque.

“In turn, these severe rental arrears figures have been inflated by the ongoing impact of county court closures. The closures have prolonged arrears cases, with landlords less able to gain court dates to quickly remove non-paying tenants. This is creating a backlog of tenants in extreme arrears, increasing the amount of rental income lost for landlords or their appointed receivers of rent.”
“Despite the recent surge in severe arrears cases, overall tenant arrears have performed remarkably well given the challenging economic environment.