According to Goodlord, over the past two months, letting agents representing over 16,000* rental properties have been asked at regular intervals to report on changes to late payments (classified as more than 7 days late) and trends around tenants asking for payment plan agreements or adjustments.
The group were asked to report on: trends prior to the lockdown; activity within their portfolio between 21st March and 21st April, and activity within their portfolio between April 21st - May 21st.
Prior to the lockdown, agents recorded late payment behaviour for 4% of properties on average.
Between March 21st and April 21st, an increase was reported in late payment behaviour - with almost 2% more properties still owing rent after 7 days. This was an increase from 4% to 5.85%.
Between April 21st and May 21st, the number of late payments increased once more: from 5.85% to 6.59% - a proportional increase of 13% month on month. This means just under 7 out of every 100 renters are now paying rent late by a week.
Payment Plans & Tenant Confusion
The number of tenants who have agreed to some form of rent reduction or a payment plan has increased by 22% since the first sample was taken - up from 2.82% to 3.43% of properties.
Anecdotally, many agents are still stating that confusion remains amongst tenants as to whether they do or don’t have to pay rent. They continue to cite tenants asking about rent breaks and payment holidays, even when financial hardship isn’t being cited.
Tom Mundy, COO of Goodlord, comments: “Instances of payment delays are creeping up month on month as the economy and livelihoods are affected by the pandemic. While the numbers aren’t insignificant, we’re also seeing a lot of positive activity on the agent and landlord side to create payment plans and offer flexibility to help tenants who are struggling - on the whole, there’s a huge amount of empathy on all sides and a desire to resolve issues constructively.
"A key area that does still need addressing however is confusion amongst tenants on paying rent whilst evictions are paused - agents are reporting that many tenants have misinterpreted these rules and some have been requesting payment breaks despite no change to their circumstances. This ongoing confusion is damaging for everyone involved.
"We predict a lot more activity in the market over the coming months, as tenants move in line with changed circumstances and those on course for long-term home working taking the chance to move to a new area. And we predict rental defaults to continue at above-average levels for every month restrictions are in place. However, the wider uptick in market activity for the rental sector is cause for optimism.”
*Please note that agents representing a sample size of 20,000 tenancies responded to the initial Goodlord survey for Month 1 (March-April). Of that group, agents representing 16,000 of those tenancies responded to the follow-up survey in Month 2. The following data is therefore based on the trends for the sample size of 16,000 tenancies, to ensure accuracy of comparison.
