Property landlords have two reasons to celebrate after October saw both a drop in tenant arrears for the second month in a row and rent increases for the ninth month running.
During October, United Kingdom rents increased by 0.4 per cent to £691 per calendar month, this surpasses September’s high of £689 pcm, according to data released by LSL Property Services’ monthly buy-to-let index.
David Brown, the commercial director of the United Kingdom letting agents network, thinks this growth is partly due to the constrained mortgage finance which has stopped a high number of first time buyers from getting onto the first rung of the all important property ladder.
Rents have been slowly creeping upwards each month for the last year and now stand just a few pounds off an average £700 per month. It is thought that the increases are likely to steady slightly during the run up to Christmas which is traditionally a slower time for the housing market. With increasing demand outpacing the increase in supply, however, it would seem rents will only go one way…up! The LSL claim that if rent inflation continues at the same pace, the average rent at some point next year will be £722 pcm.
Tenant finances were also in better shape during last month. The total of unpaid rent was £221m across the United Kingdom in October; this is down from £229.3m in September. Despite this, landlords still see having landlord insurance as an important part of property ownership.
Mr Brown said “Falling arrears provided another boost to landlords in October. Following the flurry of tenants who move for new jobs in September, new tenants have had time to settle, get their finances in order and ensure that their landlords are receiving rent on time.
“Whether they’ll stay as low or not in the near future is less certain. Government spending cuts will certainly take its toll on many tenants’ finances – and we’ll see increasing regional disparities occur as some regions, more dependent on public sector employment are hit disproportionately.”