Government forcing landlords to house non-paying tenants for lengthy periods11:18 AM, 15th September 2020
About A week ago 40
Rental arrears decreased for the second month in a row, according to LSL Property Services latest buy to let index. The figure now stands at £257million, down 18% on May’s figure of £315m.
This was a result of 9.3% of rent being paid late or missed in June instead of the 11.5% recorded the month before.
David Newnes, LSL’s estate agency managing director had expected the change but there was more to it than tenants being better off. He also offered a warning for future months.
“We tend to see an improvement at this time of the year – and witnessed a 5% drop this time last year. But the improvement has been exaggerated by a change in behaviour from many landlords. With rents rising so quickly, many landlords are being less forbearing with tenants showing signs of payment difficulties, and are looking to replace them in expectation of higher rental income. Despite this, we expect arrears to rise in the coming months. We’ve yet to see the full effects of public sector job losses, and as inflation remains high, many tenants’ finances will face mounting pressure over the medium-term.”
While their findings further confirmed the rising rent prices with London clear of £1,000 per month average, a plethora of ready tenants and yields are up nationwide. LSL don’t see it slowing down, either.
“In areas like London where competition for rental property is most intense, it’s not unheard of for rental properties to be let within a day of coming on to the market. We’ve had five successive months of rent rises, but there is no sign of a let-up anytime soon. Despite several new deals on the market, securing a big enough mortgage remains a tall order for the average buyer. The climbing cost of living and renting is impacting how much renters can save for their deposit, and demand will remain high in short-term
“In the long-term, there is an even smaller chance of a significant slowdown. Just 102,570 new homes were completed last year – at a time when the UK’s population increased by nearly half a million. This trend shows no signs of slowing. Excess demand will be driven into the private rental sector driving rents up further. Landlords thinking long‐term will do well.” Mr Newne said.
Returns are at 1.3%but they say investor can expect it rise by 1% in the next 12 months.
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