Landlords can cheer tenant arrears falling for the first time in three months, according to the latest buy to let research.
Late or missed rent added up to 9% of all rent for August – 2.2% down on July and a total of £288 million.
Meanwhile, rents were up again for the fifth month in a row, reaching a new average high for England and Wales of £734 a month – £9 a month up on July’s figure.
Although the nationwide average is up, the return is not the same for every region, says the report from LSL Property Services, owner of letting brands Your Move and Reeds Rains.
Rents reached record highs in five regions in in London, the South East, the East of England, the North West and Yorkshire & the Humber, but dropped in Wales and the West Midlands.
The firm’s spokesman, David Newnes, said: “It’s encouraging to see tenant arrears fall for the first time in three months, despite the summer holiday season. A surprisingly resilient labour market, alongside a more stringent approach to referencing and credit checking by landlords, has helped prevent further rental arrears.
“However, rental inflation is still outstripping the growth in wages, and this will keep up the financial pressure on many tenants’ monthly budgets.”
Another key figure for landlords in the survey is return on investment.
The annual buy to let yield climbed to 5.3%, up from 5% in July, reflecting an average return of £8,716 divided between rent of £7,853 and a capital gain of £863.
The annual return on investment should hit 9.2% per property over the next 12 months if rent increases follow the trend of the past three months – equivalent to £15,191 per property – says the report.
“The rental market is right in the thick of peak season, and the demand from graduates and those starting new jobs has added a new layer of competition on top of the existing pool of frustrated buyers,” said Newnes.
“London and the South East may be the powerhouses of the national rental market, but rent rises haven’t been limited to these areas by any means. In fact, rents have hit record highs in five regions as tight mortgage finance criteria and large deposit requirements for new buyers continue to ramp up the pressure on the limited stock of rental homes available.”
