Buy to let rents static, but yields and arrears riseMake Text Bigger
Tenants are paying an average £684 per month rent in February – up 3.9% on a year ago but no real change from last month.
The monthly increase was just 0.2% – a few pennies for most tenants, according to LSL Property Services, one of the country’s leading letting agents.
Despite no change in rents, arrears were up 11% from January and the average rental yield nudged up to 3.4%.
Although rents nationwide were static, some areas experienced sharper rises and falls.
Wales (1.9%), the North West (1.1%) and East Midlands (0.8%) reported the sharpest increases, while rents dropped in the North East (-1.4%), Yorkshire (-1.2%) and the South West (-1%).
The firm said more people looking for homes to rent because they could not find a mortgage was fuelling rental demand.
David Newnes, LSL Property Services managing director, said: “At a time when rents are close to all-time highs and rising once more, many tenants are feeling the financial squeeze of spiralling costs of living compared to sluggish pay growth,” he said.
“The figures should serve as reminder to property investors that active and prompt intervention is necessary at the first sign of a tenant showing signs of difficulty in paying the monthly rent cheque, or they themselves will see mounting mortgage arrears.”
Arrears added up to 12.6% of all UK rent – up 11% from the previous month – totalling £296 million in February, an increase of £258 million in January.
LSL said annual rental yields were also up – from 3.34% in January to 3.4%. An investor buying now could expect an annual return of £5,933 per property – equivalent to £8,202 in rent and capital losses of £2,269.
Newnes said: “Over the past year, extremely strong rental income has underpinned landlords’ annual returns. With house prices unlikely to rocket up as the year progresses, rents will continue to provide the lion’s share of returns for property investors.”
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