The latest figures released from LSL Property Services regarding the buy to let market shows that the cost of renting in London dropped by an average of 2.3% last month.
The surprise drop now means that the average rent in the capital stands at £969, still almost 7% cent higher than the same time two years ago. The decrease was the first monthly fall in the whole of 2010 and brought a disappointing end to what has been a good year for most landlords. It was not just London where rents fell; the fall was reflected in most regions of the United Kingdom, with rents in December falling nationally by an average of 1.2%. Notable exceptions were the South West and the West Midlands.
David Newnes, managing director of LSL property services, said “December is traditionally a slower month for the rental market. Many prospective tenants are either away from home, or prioritise Christmas spending over budgeting to move.
“This year, the added Arctic weather temporarily dampened demand, deterring many renters from hitting the streets and viewing properties. But the recent slowdown in rents is down to landlords’ pricing strategies. Landlords offering properties during the holiday season often lower the asking rent to avoid a costly void period.”
The festive period had a negative impact on tenant budgets. In total 12% of all United Kingdom’s rent was either unpaid or late by the end of December, increasing from 9.7% in November. Unpaid rent came to a huge £276 million throughout the United Kingdom in December as the festive period took its toll on the finances of many tenants who felt an additional pinch from Christmas spending. It all means that property owners with landlord insurance will face some tough decisions very soon.
Rent arrears have been increasing since October as the public sector spending cuts start to bite in a lot of areas of the country. With unemployment looking set to increase as the year goes on and rents likely to increase in the spring, many more tenants will be at serious risk of falling behind with their rent.