The average tenant in arrears owed almost a fifth more in May than they did in January, according to analysis published by PayProp, a leading rental payment automation platform.

And as we move towards the end of the Government’s furlough scheme at the end of October, landlords should prepare themselves for further increases in rent arrears as redundancies rise, it warns.

Even before the Government’s Job Retention Scheme comes to an end, the proposed changes to the furlough system are likely to put extra pressure on tenants’ finances.

From 1st August, employers will be once again required to make National Insurance and pension payments for furloughed workers, which may well result in a spike of redundancies if bosses are unable to afford these additional costs.

And from 1st September, employers will have to contribute 10% of the wages of furloughed staff, rising to 20% in October before the scheme is wrapped up at the end of October.

In addition, some employees may already be feeling the pinch as commuting costs re-emerge and the option to spend in pubs and restaurants is an option once again.

Neil Cobbold, Chief Sales Officer at PayProp, says: “The job retention scheme has helped to keep people employed and subsequently allowed many tenants to continue paying rent, but as it starts to wind down, letting agents and landlords should prepare for more tenants to fall behind on rent.

“Or, in the worst case scenario, not be able to pay at all.”

Read more about rent arrears.

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