Tenants across England and Wales continue to feel the pinch as rents rose at their fastest rate this year during the month of August, according to new research released by LSL Property Services. The average rent now stands at £713 per calender month, a rise of 1.2% since July. LSL’s Buy-to-Let Index has recorded the seventh monthly increase, and the largest increase since August 2010.
These increased rents may be attributed to the difficulty first time buyers are facing when trying to acquire a mortgage, thus forcing additional tenants into the rental market, increasing demand and competition for scarce rental properties. Commentators also note that future rental rises are highly probable, with mortgage lenders still being cautious whilst the market recovers.
Although tough times are facing tenants for the foreseeable future, for landlords and other buy-to-let investors, the outlook is not so bleak. The average landlord could potentially expect to receive an annual yield of 10.5% of property worth this year, if property values maintain the same trend of the last quarter.
With increased rents, the threat of rental arrears does become more of an issue, so it could not be all good news for landlords. August saw the first increase in arrears since April, jumping to 11% unpaid or late. Across the UK, unpaid rent arrears came to £300m during August, set to increase month-on-month if the recent trend continues.