Tenant debt on rise

A report by the Consumer Credit Counselling Service (CCCS) has reported that the number of tenants getting in touch with debt problems has increase by four per cent in the past year, totaling 103,957 cases in 2011. Renters now account for 55 per cent of the CCCS's clients.

In the past year, the CCCS has found that the monthly rent of the average tenant has risen by 2.4 per cent, while in the same timescale disposable income has fallen by an average of 40 per cent. In addition, one in ten rental tenants on CCCS's books are in arrears, with those in privately rented accommodation owing the most, with an average of £924 in unpaid rent per tenant, compared to £622 for tenants in social housing. 

The average monthly rent paid by tenants who have been in contact with the CCCS is £408 pcm, while disposable income is down to just £35 a month.

"A very large number of people are struggling to keep up with their rent payments, and with rents near record highs, the problem is getting worse, not better," said Delroy CorinaldiCCCS Director of External Affairs. "Household finances are being squeezed as it is – and for many people another rent hike will be the straw that breaks the camel's back."

Increase in tenant complaints

Figures published by The Property Ombudsman (TPO) have shown a sharp increase in the number of complaints about lettings, too. In 2011, TPO dealt with a total of 7,641 complaints, which is 26 per cent up on 2010. The most common complaints revolved around poor communication from the landlord, deposit queries and overall upkeep and maintenance of a property. More than 50 per cent of these complaints were from private tenants living in the South East and Greater London.

"Slightly more than 25 per cent of the complaints involved letting agents who were not registered with the ombudsman," said TPO's Christopher Hamer. "I am concerned that, for those consumers, they may have little alternative but to undertake potentially costly legal action to pursue their complaint, a daunting prospect in the current financial climate."

Despite being unregulated, the rental market does have avenues for codes of conduct, and any letting agent that signs up to TPO's code of practice agrees to a certain level of standard and maintenance, and also to abide by TPO's decisions should a dispute arise. However, TPO is unable to impose a fine or instigate legal proceedings against rogue landlords, agents or unruly tenants.

In response to TPO's Annual Report, Ian Potter, Operations Manager at the Association of Residential Lettings Agents (ARLA), said: “As an organisation that strives to achieve the best possible standards within the private rented sector, we are disappointed to see a rise in lettings complaints over the past year. It was, however, interesting to note that only 10 per cent of those merited adjudication by the Ombudsman, and it should also be noted that there were almost 900 new lettings members despite some consolidation in the industry.

“That said, it comes as very little surprise given there is no national regulation in place to stop rogue agents setting up shop and taking advantage of what is a fragile market – 26 per cent of complaints were against agents who did not belong to an Ombudsman Scheme.

“We have long called for increased regulation in the sector and as such, we are not unsupportive of the concept of a council to help promote consumer understanding of the importance of using professional agents like ARLA licensed members. Ultimately, it is likely to require primary legislation to achieve full control of the sector and it will be interesting to see how the proposals in Wales and London progress.

“We would also encourage prospective tenants to ensure the agent they enter into agreement with is a member of The Property Ombudsman Scheme, which provides an additional layer of protection.”

A rental survey by LSL Property Services found that rents continued to rise at the start of this year, with an unusually high number of tenants seeking an increasingly limited number of properties, and arrears increasing from 10.2 per cent to 10.7 per cent nationwide.
 
The number of tenants being evicted through the courts by private landlords has increased by 17 per cent since the end of 2007, when the credit crunch first bit.