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January 2021
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UK tenant arrears down, but more pain predicted as we enter 2021

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At the end of a year that has seen the country and the property industry scrape the bottom of the barrel for good news stories, letting agencies and landlords can breathe a cautious sigh of relief.

Our latest PayProp UK special report, published in December, showed a downward trend of tenants in arrears over the autumn and winter months of 2020.

Although a 3.3% drop between September and November may seem marginal, this brings the percentage of tenants in arrears down to 11.8% – the lowest level recorded since the first lockdown in March 2020.

During the same three-month period, the research also shows a small but steady fall in the percentage of rent owed by tenants.

But how have we achieved falling arrears during such a rocky period?

Adapting to a new normal


Looking back to the spike in September, the subsequent national reduction in arrears seems unlikely. However, in our estimation, it is evidence of property professionals and wider society adapting to the ’new normal’, despite tighter restrictions and ongoing redundancies.

The research also suggests the vast majority of tenants in arrears have been attempting to clear them, with 77% managing to pay off some or all of their arrears between September and October. The data suggests some renters are negotiating affordable repayment plans in the event they cannot pay back the full amount straight away.

Other factors may also have influenced a high proportion of tenants to reduce their arrears in the last few months – notably the reopening of courts and a continuation of evictions in England and Wales. Many renters will have been doing everything they could to avoid a court date and possible eviction.

Hard data against uncertainty


December’s report concludes our series of three special reports for 2020 which have closely monitored the impact of the pandemic with the help of hard transactional data from the PayProp system, covering tenancies from across the UK.  

Looking back to the very first report, which revealed that almost one in six renters were behind on payments by May, people across the industry rightly feared the start of an arrears spiral, but the data shows otherwise.

Instead, after the initial lockdown inMarch, most tenants in arrears have been repaying some or all of their debt, despite evictions ‘bans’ being widely touted in the press. We put this down to the hard work of professional agents and the introduction of government support in the form of the furlough scheme.

While tempting to get stuck on the positives, including a consistent fall in the percentage of rental arrears from August to November, December’s review predicts things will get worse as we enter 2021.

More pain to come


Our data from January 2020 and January 2019 show a seasonal spike in arrears after Christmas as tenants overspend during the festive period. Despite the UK facing various forms of tiered restrictions over the festive season, we expect to see the same in upcoming arrears figures from January 2021.

As a result of this and new job losses, we predict more struggles to pay the rent, despite sustained government support. Nevertheless, agents can take some encouragement. Trading restrictions on sectors including hospitality present a timely opportunity to consumers to save money that would otherwise have been spent on social activities during the Christmas and new year holidays. This will enable more tenants to cover rent – and in some cases help them to repay outstanding arrears.

How ready are we for 2021?

Compared to January 2020, it stands to reason that the industry is far better prepared for the challenges of COVID-19. Notwithstanding tiered restrictions and lockdowns, lettings remains essential and will stay open.

In addition, agencies are embracing PropTech to manage new ways of working and the data shows that most tenants continue to pay rent – and that the majority of those in arrears will attempt to clear their debts.

The government’s extended furlough scheme until April will also bring much-needed relief and security for thousands of businesses.

Finally, there is the huge logistical operation of the COVID-19 vaccine rollout which provides hope that 2021 will not be a repeat of 2020. With continued government support and a successful vaccine rollout, we hope to see tenant finances in a stronger position by the summer.

For the most in-depth look at the effects of the pandemic on UK tenant arrears, download our full report. In it, also look out for the first PayProp Rental Confidence Index, our dedicated survey of UK tenants, landlords and agents about their experiences with COVID-19.

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