Landlords experienced rising rents, rising prices, falling tenant arrears and lower void periods in July according to the latest research from LSL Property Services, which owns the UK’s largest lettings agent network, including national chains Your Move and Reeds Rains.
Rents in England and Wales rose at their fastest pace in a year in July, up 0.5% compared to June, the second consecutive monthly increase.
Rents are 4.5% below the peak last August, but the strengthening housing market and growing signs the recession is over suggest sustained rent declines are now a thing of the past.
Tenant finances have also improved. Arrears fell sharply in July, dropping to 11.2% of all rent owing from 11.6% in June, meaning rent totalling £247 million had not been paid on time. 517,000 tenants were behind with their rent at the end of July, down from the 529,000 who had not paid up by the end of June. One third of these had not paid their landlord for more than a month and almost one quarter (22%, or 115,000) were facing action by their landlord to evict them.
Landlords are also having less difficulty finding tenants. Voids, the number of days a property stands empty each year, have fallen by 2.5 days in the latest period from an annualised 29.2 days to 26.7. These 2.5 extra days’ rent per year will net landlords collectively an extra £181 million that would otherwise have been lost.
Yields slipped slightly in July from 5.04% to 5.02% because rent increases were outstripped by stronger house prices. But, after adjusting for the improvement in longer term arrears and void periods, the effective yield actually rose slightly, from 4.59% to 4.61%.
David Brown, commercial director of LSL property services, said: “Landlords finally have reason to celebrate after a tough 18 months. There was a glut of rental supply from the middle of last year as thousands of people who were struggling to sell homes put them up for rent instead. This additional supply from those less motivated to achieve market rents forced other landlords to put prices down and led to declines in overall rental levels.