The number of tenants in severe rental arrears has fallen sharply to the lowest level in two years, according to the latest Tenant Arrears Tracker according to Templeton LPA, the specialist practice of LPA Receivers.

In Q3 2013, the number of tenants in severe arrears – those more than two months behind on their rent – fell by 25% on a quarterly basis.  In absolute terms, there are now 23,000 fewer tenants in severe arrears than in the second quarter, to stand at 69,000. This represents the lowest level in two years, since the third quarter of 2011 when this figure last stood below 70,000 tenants.

The proportion of all tenants in such arrears of more than two months has also decreased dramatically.  Those in serious arrears now represent 1.7% of all tenancies in England and Wales, down from 2.4% in the previous quarter. On an annual basis, the number of tenants in severe arrears has shown an even more dramatic improvement, falling by 34% since Q3 2012.

Fewer cases of severe arrears come alongside a wider improvement in tenant finances. According to LSL’s latest Buy-to-Let Index, overall tenant arrears also fell in August, with 7.8% of all rent being late or unpaid. This figure compares with 8.2% of all rent in the previous month.

Paul Jardine, director and receiver at Templeton LPA, said:“This is an important landmark. Tenants in these most severe situations could face eviction – whereas the majority of arrears cases are resolved much more easily.  There’s a qualitative difference, which makes this particular improvement so important.  Such a dramatic fall in the number of people potentially losing their homes is not just an excellent signal for the private rented sector – but for the entire UK economy.”