For landlords with properties to rent a key concern has always been will the tentant default on their rent? Well, may be things are starting to improve. During the last 10 years or so there has been a significant reduction in the number of people falling behind with their rent. For example, during the period from 1993 to 2003 social sector tenants in arrears reduced from 17% to 12%, and private sector tenants in arrears reduced from 9% to 6%. Based on a Government survey identifying tenants who had not fallen in arrears with their rent for the preceding 12 months.
However there have been some notable exceptions to this trend. In particular 1996 to 1998 when those in arrears with their rent increased for two successive years, and more recently the number of tenants in arrears for the private sector started to increase again from 2003 to 2004 (the most recent data found).
It is not surprising for the social sector have a higher percentage of tenants in arrears with rent when there are dramatic differences in the percentages of people in employment, as highlighted by the following research data:
Social sector rental properties (reference person per household)
26% in full time employment
15% in part time employment
Private sector rental properties (reference person per household)
67% in full time employment
11% in part time employment
Given these differences it seems remarkable that so few social sector tenants are in arrears with their rent, however other factors to take into account are government benefits made available to those not in employment, in particular people classified as "economically inactive" which are reported to be 45% within the social sector and 17% within the private sector. Another factor to consider is the typical income for people within the social and private rental sector, research for 2003/4 also identifies some very significant differences:
Mean income for the household reference person
Social sector £11,900
Private sector £23,300
Owner-occupier £31,900
This data suggests that those in the private rental sector may earn almost twice as much as those in the social sector. Further, for people who own or are purchasing their home, the average income appears to be almost three times that of people in the social sector.
Overall some interesting data here, but what can be concluded from this? One positive factor is that there is a definite trend in the reduction of people who are in arrears with their rent, not just the within the private sector, but also for social sector tenants. This raises a question for private landlords and letting agents within empty properties that often advertise "DSS not accepted", why not consider letting to tenants who claim housing benefit?
