One of the UK’s largest tenant referencing firms has warned that the restrictions to be placed on landlords by the looming Renters’ Rights Bill will push up rent arrears.

FCC Paragon, which references thousands of tenants every year, says its analysis of official figures show rent arrears are already rising, up 3.2% on an annual basis during 2023/24 – or nearly a quarter of a million rented households.

Approximately one in 20 of all rented households in England are in arrears at any given time, although this varies significantly on a regional level, climbing to nearly one in ten within Yorkshire and the Humber.

FCC Paragon says it is concerned that the abolishment of Section 21 evictions and a court system that is ‘unfit for purpose’ increasing the time it takes to evict tenants, will see rent arrears rise because tenants in arrears will stay put for longer and their rent debts will rise.

“While the Renters’ Rights Bill may have been designed with the best intentions, the rental sector is facing some very serious consequences and we anticipate a continued spike in rental arrears to be one of them,” says the firm’s MD Bikki Leaves.

“The move to periodic tenancies, the abolition of Section 21 and preventing tenants from offering more cash upfront to offset income concerns will all contribute to an increased level of vulnerability on the side of landlords.

“Therefore, there has never been a greater need to carry out the most comprehensive referencing possible and this simply can’t be done by digital referencing platforms, the risk is too great and requires the expertise of experienced and dedicated staff members to leave no stone unturned.”