Tenant arrears down as rent rises lose pace
According to the latest Buy-to-Let Index from LSL Property Services, total arrears in May were £276m, compared to £282m in April.
This equates to 8.2% of all rent across England and Wales, compared to 8.4% of all rent in April.
Average rents in England and Wales rose by 0.1% in May to £737 – slower than the average monthly increase of 0.3% over the previous 12 months.
However, the average rent is up 3.5% on a year ago and stands at the third-highest level ever.
Rents rose last month in six out of 10 regions, with the largest increases in the East Midlands (+0.4%) and the North West (+0.3%), while London, the South East and East of England saw slightly more modest rises of +0.2%. Rents fell in Wales (-0.7%), the West Midlands (-0.4%) and Yorkshire and the Humber (-0.3%).
The annual picture is somewhat different. Over the last year, rents have grown most in London (+7.2%), followed by Wales (+5.2%) and the North East (+0.4%). Rents were higher in May 2013 than May 2012 in nine out of 10 regions, with the South West the exception, having experienced no change in the average rent.
The total annual return on a rental property was 5.3% in May. This represents an average return of £8,747 with rental income of £7,797 and a capital gain of £950. The average yield on a rental property was unchanged on a monthly basis, at 5.3% in May, compared to 5.2% in the same month last year.
If rental property prices maintain the same trend as the last three months, the average investor in England and Wales could expect to make a total annual return of 6.2% per property over the next 12 months – equivalent to £10,316 per property.