The Alarming Rise in Housing Arrears and its Impact on Residents and Associations

Arrears have clearly increased, as reported by property managers

Housing associations have experienced a significant increase in arrears over the past year, with more than 60 percent of property managers citing this rise. Neglect of payments is the primary reason for apartments being taken over by housing associations. The increase in fees has raised concerns among residents, especially those under 25 years old, about its impact on their finances. Despite this, the Landlords’ Association does not predict an increase in bankruptcies among housing associations.

The rise in arrears coincides with an increase in interest rates and the cost of living, which has pushed residents’ expenses beyond their limits. According to a survey conducted by the Land Management Association, around 65 percent of property managers reported an increase in arrears in the past year. This worrying trend is particularly evident in municipalities experiencing a decline in population.

The economic downturn in recent years contributes to the growth of arrears, which is linked to the sudden increase in interest rates and rising living expenses. Housing associations have raised maintenance fees by nearly ten percent on average this year, reflecting the financial strain on residents. Despite these challenges, neglect of payments remains the primary reason for apartments being taken over by housing associations.

Housing companies usually set aside funds for unexpected expenses and unpaid fees for a few months of maintenance. However, with more properties falling into arrears, housing associations are collecting less money as a buffer for repairs and unexpected expenses. This lack of financial reserve limits the ability of housing companies to respond to emergencies and carry out essential maintenance tasks.

As a recommendation, housing associations should have a buffer of 2-3 months to cover unexpected expenses. This would help them better manage their finances and prevent them from falling into further debt or taking over more properties due to neglect of payments.

In conclusion, while there has been an increase in arrears among housing associations due to various factors such as rising living costs and neglect of payments, it is important that they take proactive measures to manage their finances and prevent further debt accumulation or taking over more properties.

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