A majority of tenants across the UK believe COVID-19 and the subsequent lockdowns have not made it more difficult for them to pay rent, while only a very small number are very concerned about rent arrears.

A Rental Confidence Index released by rental payment processor PayProp – surveying agents, landlords and tenants in all regions of the UK – shows that almost 70% of tenants have not found it more difficult to pay rent during the pandemic.

At the same time, less than 12% of all tenants surveyed said they were concerned or very concerned about rent arrears.

The ability to pay rent is evidenced by PayProp data which shows that by November, the percentage of tenants in arrears had dropped to 11.8% from a peak of 15.5% in May. Average arrears owed dropped to 121.1% of monthly rent in November, down from a peak of 127% in August.

Rent arrears dipped during final months of 2020

Tenants’ confidence in their ability to pay lines up well with national arrears data from PayProp’s latest COVID-19 Special Report, which shows that both the percentage of tenants in arrears and the typical percentage of rent owed decreased during the final few months of 2020.

The percentage of tenants in arrears dropped to 11.8% in November, down from 12.2% in October. This is the lowest percentage recorded since before the spring lockdown in March when 9.6% of tenants were in arrears.

Meanwhile, the average percentage of rent owed by tenants in arrears fell to 121.1% in November, down from 124.4% in October and 125.5% in September.

Some 77% of tenants in arrears paid off some or all of the money they owed between September and October, while a further 50% paid back arrears between October and November.

Between September and November, all UK regions showed a decline in the percentage of tenants in arrears. The biggest drop was recorded in the North East at 4.4%, while the lowest difference between September and November was recorded in the East of England at 2%.

However, the North East still had the highest percentage of tenants in arrears in November at 20.4%, while Scotland recorded the lowest percentage at 8%.

When it comes to the average amount of arrears owed, the highest November figure was recorded in Northern Ireland at 146.7% of monthly rent, with London recording the lowest at 96.9%.

The change in the percentage of rent owed between September and November is a mixed bag regionally. A 32.2% decline was recorded in Wales, while tenants in arrears in the North East, North West, South East and Scotland finished November owing more than they did in September – potentially in part thanks to tenants with smaller arrears paying them off in full.

“Falling arrears suggest that, even though restrictions were tightened towards the end of 2020, society has adapted to the ‘new normal’ – which is a promising indication now a third national lockdown is underway,” says Neil Cobbold, Chief Sales Officer at PayProp.

“Arrears could get worse over the coming weeks due to the tighter set of restrictions now being imposed, but our research shows that the vast majority of tenants have been able to continue paying rent as normal – and that those who end up in arrears generally try to clear them,” he says.

Tenants want more support from the government

Despite decreasing arrears and the majority of tenants’ confidence in their ability to pay rent, just 16% of those surveyed by PayProp said they felt the government had provided them with enough support.

However, since then the Chancellor Rishi Sunak has pushed back the end dates of the furlough and Self-Employed Income Support schemes until the end of April, while the bans on evictions in England, Wales and Scotland have also been extended.

“Many tenants will have benefited from some form of government support since March 2020, but there have been calls to provide further grants to cover rent – which could also help landlords financially,” says Cobbold.

“The extension of the eviction ban provides renters with further security. However, they must remember that repossessions for the most serious offences can still take place,” he explains.

“For tenants in serious arrears of six months of rent or more, eviction cases can still proceed, so they should do all they can to reduce their debt.”

Pandemic’s impact on living requirements continues

As revealed by the survey, the spread of COVID-19 has also led many renters to reassess their living situations. With a significant proportion of the tenant population now working from home with no need to commute, many people have looked to move away from densely populated urban areas.

Another key factor for renters over the last year has been access to outdoor space. Almost 70% of renters surveyed by PayProp said they have outside space at their property, while of those who didn’t, 90% said they would have liked it during the pandemic.

A recent report from PwC suggested that London’s population is set to decline by 300,000 this year, the first time it has shrunk since 1988 – potentially partly driven by changing demand for housing.

“Whether the populations of cities like London continue to fall over the long term remains to be seen, but in the short term it is clear that renters are prioritising homes with outdoor space and other pandemic-related requirements,” adds Cobbold.

“Although office working in city centres is likely to return in some form, there is no doubt that renters will place more value than ever before on things like gardens and home office space for many years to come – creating new opportunities for landlords who offer these types of amenities.”