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A spike in the number of households falling into rental arrears could be on the cards due to the Renters’ Reform Bill, according to FFC Paragon.
Fresh analysis by the referencing firm shows that an estimated 235,837 privately rented households fell into rental arrears during the 2023/24 financial year, marking a 3.2% increase on the previous year.
In fact, the latest figures from the English Housing Survey found that 5.3% of all privately rented households across England were either currently in arrears or had previously been so, although this figure climbed to as high as 9.3% in Yorkshire and the Humber.
However, it is London that is home to the most privately rented properties falling into arrears in terms of sheer volume, with the region accounting for a quarter of all homes facing arrears across the PRS.
Whilst the long awaited Renters’ Rights Bill is set to bring greater power to tenants, there are widespread concerns that its implementation could cause rental arrears across the PRS to increase further.
The key reason being the additional strain that is expected on the court system as a result of scrapping Section 21 ‘no-fault’ evictions.
With landlords facing fewer protections over rental arrears and a court system that is unfit for purpose in helping them address the issue, detailed and in-depth tenant referencing has never been more vital in helping prevent the problem of arrears before it can arise.
The managing director of FCC Paragon, Bekki Leaves, commented: “Whilst the Renters’ Rights Bill may have been designed with the best intentions, the rental sector is facing some very serious consequences and we anticipate a continued spike in rental arrears to be one of them.
“The move to periodic tenancies, the abolition of Section 21 and preventing tenants from offering more cash upfront to offset income concerns will all contribute to an increased level of vulnerability on the side of landlords.
“Therefore, there has never been a greater need to carry out the most comprehensive referencing possible and this simply can’t be done by digital referencing platforms, the risk is too great and requires the expertise of experienced and dedicated staff members to leave no stone unturned.
“But landlords need further peace of mind and that’s why the ability to offer a warranty on any loss of rental income or cost incurred due to subsequent evictions is what sorts the wheat from chaff within the referencing space and FCC Paragon’s ability to offer such a safeguard allows our clients to sleep at night, knowing they are fully covered on all fronts.”
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