Can one trust the moderate arrears landscape as the festive season approaches?
Rental agents are going into the holiday season in a good position. Data from the upcoming PayProp Rental Index for Q3 2024 shows that just 17.4% of tenants were behind on their rent, down from 18.1% in the previous quarter. That’s not far from the record low of 17.0% set in Q4 2023. It’s also a good recovery from the increase in arrears seen in Q1.
Tenants in arrears further owe less on average than they did in the previous quarter. The average arrears percentage in Q3 was 74.3% of average monthly rent, down from 76.8% last quarter.
Tenants’ finances have finally also been helped by falling inflation and, since late September, a reduction in interest rates. The average tenant spent less on rent and debt repayments and had more disposable income in Q3 than in Q2 (25.4% of income left over vs 23.0% in Q2).
But December can bring rent collection challenges as some tenants prioritise festive spending over paying their full rental amount.
Agents can get ahead of the issue by sending out invoices for January’s rent well in advance. Billing tenants between 13 and 20 December lines up with common pay schedules and makes it more likely that agents are still at work to chase any late payments. If the tenant is a business or other organisation, PayProp recommends invoicing them no later than 10 December, so that payment is made before they close for the holidays.
By taking these steps now, you can ensure that you and your landlords have peace of mind this festive season.
