35,000 fewer tenants are facing rental arrears of more than two months, compared to a year ago, according to the latest Tenant Arrears Tracker by LSL Property Services plc, owners of Templeton LPA, the specialist practice of LPA Receivers.

In absolute terms, those more than two months behind on their rent now number just 67,000. This compares to 102,000 tenants at least two months in arrears in the same period last year, or an annual improvement of 35,000 households.

Representing a 35% annual improvement, this comes on the back of successive quarterly falls. Most recently the number of tenants in severe arrears has dropped by 0.2%, between Q1 and Q2 2014.

As a proportion of all tenants, those in serious arrears of more than two months has also improved, standing at 1.5% in Q2 2014, compared to 2.2% in Q2 2013. This means an overwhelming 98.5% of tenants in the private rented sector have avoided falling into significant rental arrears in the last quarter.

Improvements in serious rental arrears tally with the latest figures on overall rent arrears, of any duration. According to LSL’s latest Buy-to-Let Index, overall tenant arrears now stand at just 7.0%, as of May 2014, down from 8.2% in May 2013.

Paul Jardine, director and receiver at Templeton LPA, said: “Private renting has absorbed enormous pressure – and will continue to do so. For over half a decade, our national aspiration to own our own homes has struggled in the face of the longest economic crisis on record. And in the midst of this, private renting has provided a solution.

“Certainly, some households succumbed to the wave of unemployment that followed the 2008 crisis, and as the broader monthly squeeze tightened its grip. For a time – though still for only a small minority of tenants – there was a significant rise in serious rental arrears. But now as the jobs market gradually comes back to life, the effect on the most hard-pressed of households is clear to be seen.

“While wages are yet to pick up significantly, those in the most serious financial problems often face a lack of any earnings at all. So as the risk of unemployment retreats this year, those with serious problems paying their rent – and most at risk from losing their homes – are benefiting the most.”

Despite fewer tenants falling into the most severe arrears, the number actually facing eviction, while significantly lower in absolute terms, has continued to rise. As of the first quarter of 2014, 33,000 tenants are facing potential eviction via court order, up 5.9% from Q4 2013. On an annual basis this leaves evictions levels 10% higher than in Q1 2013.

Meanwhile, landlords have continued to benefit from both the improving financial position of tenants, and a beneficial mortgage market. Landlords’ own mortgage arrears have fallen for the sixth successive quarter, with just 14,700 buy-to-let mortgages in arrears in more than 3 months in Q1 2014, down 10.9% from the previous quarter. On annual basis this means buy-to-let mortgage arrears have improved by 17.9% since Q1 2013.

Jardine added: “Landlords and tenants depend closely on one another. But communication is always vital to keep that relationship in effective working order. A good landlord or managing agent will have a working knowledge of their tenants’ situation. If rent becomes late, it is vital that both parties discuss what can be done to get the tenancy back on track as soon as possible. When rental arrears do arise, they are usually resolved in the space of a month or two – and the chances of more serious problems arising are falling even further.”

David Brown, commercial director of LSL Property Services, said: “The minority of landlords who felt the worst of the credit crunch are now paying down arrears while the sun shines. Interest rates are favourable, rental yields are solid, and total returns are boosted by the bonus of capital appreciation. This is especially encouraging since, while portfolios are growing and new landlords are entering the market, this progress is underpinned by solid finances.

“Chances that tenants will become fundamentally unable to pay their rent have always been low – and are set to improve further. This is not just great news for those particular households, but for anyone who rents their home. Landlords are more and more confident about the future of the rental market, and increasingly willing to invest in new homes to let.”