Rents and arrears show February rise

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by Gill Montia

Rents in England and Wales have risen for the first time in 2011, according to LSL Property Services, the UK’s largest lettings agent network.

February saw the typical private renter paying £684 per month, with the figure up 0.2% on January and 3.9% year-on-year.

For landlords, total annual returns remained steady at 3.4% and average yield increased to 5%, as rents rose faster than rental property values.

On a regional basis, the greatest monthly increases were in Wales (1.9%), the North West (1.1%) and the East Midlands (0.8%).

London recorded a modest increase of 0.3% compared to January, but rents in the Capital have now risen by 7.7% in the last 12 months, or almost twice the national average.

The biggest decreases were in the North East (-1.4%), Yorkshire and the Humber (-1.2%) and the South West (-1%).

Also on the downside, tenant arrears rose again last month, with 12.6% of all rent in arrears, up from 11% in January. February’s total unpaid rent amounted to £296 million.

LSL estate agency managing director, David Newnes, comments: “The consistently constrained level of lending to home buyers has bolstered demand – and rents – in the private rental sector during what is typically a slower period.”

He adds: “With the mortgage market even more sluggish since the start of 2011, this backlog of frustrated buyers has increased even further and rents have risen correspondingly.”

Looking ahead, Mr Newnes suggests that if property values continue as they have in the last three months, a property investor can expect to make a total annual return of £5,933 per rental property (£8,202 in rent, with a capital loss of £2,269), over the next 12 months.