Fewer tenants are going into rent arrears, according to the latest figures from Handelsbanken.

It reports that tenant stress – driven by the cost of living and energy crisis - is easing, as the bank’s poll of large portfolio landlords reveals a third (34%) are experiencing overdue or late payments from tenants compared with 41% in 2023. Just over half (53%) are seeing requests for rental deferments/contract renegotiation from tenants, down 7% on last year.

Despite this, 60% are seeing an increase in voids, up from 54% – perhaps reflective of increased demand among tenants for quality and EPC ratings, according to the research.

Handelsbanken reports that most property investors are unfazed by UK political change, while hopes of base rate cuts are boosting market optimism. As a result, 62% plan to increase the size of their portfolio over the next 12 months, up on 59% last year, while 10% plan to decrease or dispose of all of their properties in the year ahead compared with 14% in 2023.

Optimism

Its study, based on the findings of investors with an average of 35 properties each, found more than half (52%) say the prospect of a rate cut in August and potentially a further cut before the end of the year makes them more optimistic about the market.

Simon Bradley (pictured), chief credit officer at Handelsbanken, believes there is cautious optimism around the property market and activity among existing investors is picking up. “It may be that many have decided the economy has potentially reached the top of the interest rate cycle and that the time is right to engage in new deals,” he adds.

“We are seeing many of our Handelsbanken property professionals already looking to increase their credit lines in anticipation of potential acquisitions as market rates soften and property values stabilise over the coming months.”