Landlords face rental arrears as cost of living crisis hits tenants

Landlords must brace for soaring rental arrears as the cost of living crisis hammers tenants, experts have warned.

Renters will shoulder the worst of the biggest fall in living standards on record as the Government’s fiscal watchdog this week forecast that take-home pay would fall by 2.2pc this tax year.

Among working- age households, the drop will be almost double at 4pc, according to analysis by the Resolution Foundation, a think tank. For the poorest quarter of households, real incomes will plunge by 6pc.

Dan Wilson Craw of Generation Rent, a campaign group, said more than a million tenants, or roughly one in five private renters, were already on the edge of being unable to afford payments.

Ben Beadle of the National Residential Landlords Association, a trade body, said: “We are seriously concerned about the impact that the cost of living crisis will have on the ability of tenants to cover rents.”

The drop in incomes will hit just as tenants see their energy bills rise by 120pc this year to reach an expected average of £ 2,800 by October in the wake of the energy price crisis and the war in Ukraine.

Neal Hudson of BuiltPlace residential analysts said: “If things did get really tough, some tenants might find it easier not to pay their rent than not to pay other bills.” This is because landlords are not able to immediately seize properties from tenants who miss payments.

A record 1.9 million renters rely on housing benefit. “More than half of them are paying more in rent than their housing benefit will cover,” said Mr Wilson Craw.

Polly Neate of the housing charity Shelter criticised the Government for continuing to freeze housing benefit despite record rent rises. “Families will be facing impossible choices between keeping food in the fridge and keeping a roof over their heads,” she said.

The new pressure on rental income will hit landlords just as they must pay as much as £ 10,000 per property to cover energy efficiency upgrades.