Boost for landlords as arrears fall The overall amount of rents in arrears in England and Wales fell throughout 2013, according to new data, increasing confidence among buy-to-let landlords already boosted by rising rents. Although arrears rose on a monthly basis to 9.7 per cent of total rents in December, up from 6.6 per cent in November, the long-term trends are more positive. Figures from LSL Property Services show that on average 7.7 per cent of rents were in arrears at the end of each month in the fourth quarter of 2013. This was down from 8.3 per cent a year earlier and from 8.2 per cent in the third quarter. The fourth quarter was the only quarter in 2013 when, on average, less than 8 per cent of total rents were unpaid or late at the end of each month. "Economic prospects appear to have transformed since this point last year, with a pervading confidence taking hold," said Paul Jardin, director at Templeton LPA. But households are still heavily indebted, and wages are only starting dimly to reflect a brighter economic picture. The buy-to-let property market was badly hit by the financial crisis. In 2007, new buy-to-let mortgage lending hit £44.6bn. By 2009, this figure had fallen to £8.5bn, according to the Council of Mortgage Lenders. However, new lending is expected to exceed £20bn in 2013, according to the CML, as the buy-to-let mortgage market begins to regain some of its lost lustre. Landlords, many of whom take out buy-to-let mortgages, have seen their own arrears situation improve in 2013. According to the latest CML figures, the number of buy-to-let mortgages in arrears over three months was 17,500 at the end of the third quarter of 2013, down 20 per cent year on year. In the first quarter of 2009, by contrast, 45,400 buy-to-let mortgages were in arrears of three months or over. Andy Young, director of the Landlord Centre, said that after the credit crunch many lenders, perturbed by the threat of arrears, were reluctant to lend for buy-to-let mortgages. He said that this situation was now changing. "More and more lenders are continuing to expand their buy-to-let lending and more lenders are entering the market this year," he said. While the wider buy-to-let market continues to improve, those in severe arrears of two months or more rose by 3.4 per cent on a quarterly basis in the last three months of 2013. There were 67,000 households in severe arrears as of the end of December. David Brown, commercial director at LSL Property services, said that the rise in those severely struggling with rent payments still represented a risk to buy-to-let landlords. "Today's biggest risk for the private rented sector is a small minority of tenants who are in a very different financial boat - still struggling with several months" of late rent," he said. For these households, any signs of economic growth have been confined to the pages of the newspaper. Annual improvements in severe tenant arrears are yet to feed into eviction rates, though. According to the most recent LSL data, the number of tenants facing eviction through court orders stood at 30,807 at the end of the third quarter of 2013, a rise of 11 per cent from the end of the second quarter.