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News: Rents are rising again but so are arrears, says LSL

Thu, 25 Apr 13

Rent levels have reversed a four-month downward trend, to stand 4.2% higher than a year ago.

Last month, average rents in England and Wales rose 0.5% compared with February, to stand at £735 a month. Less good news for landlords was that tenant finances worsened, with 8.5% of all rent now in arrears.

The latest data, from LSL – parent company of letting agents Your Move and Reeds Rains – says that the March rise in rents was the first since last October. LSL said it expects the upward trend to continue.

Rents were higher on a monthly basis in six out of ten regions. The strongest growth was in London where a 1.3% monthly rise – and a 7.9% annual increase – took rents in the capital to a fresh record, averaging £1,106 per month.

According to LSL, the cost of renting in London has gone up eight times faster than wages in the last year.

London’s rise was followed by the North-East where rents grew 0.9% compared to February, while in Yorkshire and the Humber rents increased by 0.6% on a monthly basis.

Rents dropped the fastest in the South-West, falling 0.5%, followed by Wales where the fall was 0.4% in a month.

The total annual return on a rental property rose to 6.3% in March. This represents an average return of £10,329 with rental income of £7,751 and a capital gain of £2,578. The average yield on a rental property was 5.3% in March, compared to 5.2% in March 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 10.9% per property over the next 12 months – equivalent to £18,173 per property.

The total amount of rent late or unpaid worsened. Total arrears in March were £284m, up £36m from £248m in February. This equates to 8.5% of all rent across England and Wales, compared to 7.4% of all rent in February.


See also: Rents by Town and Postcode, LSL Rental Index

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