Property News - Rent arrears up by £88 million during pandemic waves, hitting a total of £365 million



Posted on Wednesday, September 29, 2021

The latest research by Birmingham estate and lettings agent, Barrows and Forrester, examines the true impact of the COVID-19 pandemic on landlords due to rent arrears among private rental tenants in England, revealing that the total amount of arrears during the initial wave of the pandemic was dwarfed by arrears during the second. 

There are 4.8 million private rented households in England. During wave one of the pandemic restrictions figures from the ONS estimated that 7% of these households, equalling 335,860 homes, were at least one month behind on their rent payments. 

The average rent in England in July 2020 was £826 per month. This means the total rent arrears during wave one was at least £277.3 million. However, given that a number of households were more than one month in arrears, this is a relatively conservative figure. 

During wave two of the pandemic, the number of households in at least one month’s arrears rose from 7% to 9% which means wave two saw some 431,820 private rental households fall into arrears. 

The average cost of renting was also higher during wave two than during wave one, rising from £826 to £846 per month. So, with almost 432,000 homes at least one month behind on rent, Barrows and Forrester estimates the cash total of arrears to have been at least £365.3 million. 

This marks an increase of 31.75% from wave one, a pounds and pence difference of just over £88 million. 

When analysing the England data on a closer regional level, it is revealed that four English regions saw arrears grow by more than the national average between wave one and wave two. 

The largest arrears growth was seen in the East Midlands, where between the first two waves of the pandemic, rent arrears increased by more than 36%. In both the South West and the East, arrears increased by 35.6%, and in the South East, they grew by 35%. 

The smallest regional increase between each wave was in London where total arrears grew by just over 24%, but due to London’s very high rent prices, this 24% growth accounted for almost £28.5 million, by far the largest sum in the nation. 

The country must now wait and see how rent arrears will be affected by a potential third wave of the COVID-19 pandemic which most analysts predict will occur between September and October 2021. 

Managing Director of Barrows and Forrester, James Forrester, commented:

“The first two waves of the pandemic shook the rental market to the core. All of a sudden, many tenants who had no previous problems with paying rent on time found themselves out of work, or at least having their hours significantly cut as employers tried desperately to find a route to survival during an unprecedented moment in modern history. 

This left hundreds of thousands of people unable to afford steady rent payments and so the government stepped in to protect them, making it almost impossible for landlords to evict them during the height of the pandemic. 

As a result, when wave two arrived, we saw a 2% rise in the number of private rental households in arrears which came at a considerable cost to the nation’s landlords. 

We are starting to see normality return to the rental market but this will do little to comfort those landlords who are now severely out of pocket and should a third wave materialise, we will no doubt see yet another increase in the total amount of rental arrears seen across the market.”

 

Table shows estimated rental arrears based on just one month of lost rental income during Wave 1 of pandemic

Location

Private rental households - number (2020)

Ave Rent pm - July 2020

Wave 1 - June/July 2020 (7% in arrears)

Wave 1 - June/July 2020 - est cost of arrears based on one month rent behind

London

1,042,000

£1,611

72,940

£117,506,340

South East

670,000

£1,034

46,900

£48,494,600

East of England

497,000

£932

34,790

£32,424,280

South West

506,000

£876

35,420

£31,027,920

North West

556,000

£773

38,920

£30,085,160

West Midlands region

451,000

£721

31,570

£22,761,970

Yorkshire and the Humber

482,000

£670

33,740

£22,605,800

East Midlands

391,000

£656

27,370

£17,954,720

North East

203,000

£535

14,210

£7,602,350

England

4,798,000

£826

335,860

£277,289,997

Sources

Gov.UK - Dwelling Stock

Homelet

Household Resilience Study

 



Table shows estimated rental arrears based on just one month of lost rental income during Wave 2 of pandemic 

Location

Private rental households - number (2020)

Ave Rent pm - Dec 2020

Wave 2 - Nov/Dec 2020 (9% in arrears)

Wave 2 - Nov/Dec 2020 - est cost of arrears based on one month rent behind

London

1,042,000

£1,556

93,780

£145,921,680

South East

670,000

£1,085

60,300

£65,425,500

East of England

497,000

£983

44,730

£43,969,590

South West

506,000

£924

45,540

£42,078,960

North West

556,000

£772

50,040

£38,630,880

West Midlands region

451,000

£735

40,590

£29,833,650

Yorkshire and the Humber

482,000

£682

43,380

£29,585,160

East Midlands

391,000

£694

35,190

£24,421,860

North East

203,000

£539

18,270

£9,847,530

England

4,798,000

£846

431,820

£365,316,804

Sources

Gov.UK - Dwelling Stock

Homelet

Household Resiliance Study

 



Table shows the change in estimated rental arrears based on just one month of lost rental income during Wave 1 and Wave 2 of pandemic 

Location

Change % - total value one month arrears Wave 1 vs Wave 2

Change £ - total value one month arrears Wave 1 vs Wave 2

London

24.18%

£28,415,340

South East

34.91%

£16,930,900

East of England

35.61%

£11,545,310

South West

35.62%

£11,051,040

North West

28.41%

£8,545,720

West Midlands region

31.07%

£7,071,680

Yorkshire & Humber

30.87%

£6,979,360

East Midlands

36.02%

£6,467,140

North East

29.53%

£2,245,180

England

31.75%

£88,026,807






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