editor posted on October 14, 2011 02:51
Rents rose by their fastest rate in a year in August, bouncing up 1.2%, whilst tenants arrears grew in pure money terms by 19.5%.
The findings are in the latest buy-to-let report from LSL Property Services.
It says that 10.7% of all UK rent was unpaid or late by the end of August – up from the 9% of rent unpaid or late in July.
Unpaid rent totalled an estimated £300m across the UK in August, up 19.5% from the £251m unpaid in the previous month.
The mounting arrears come as the average rent in England and Wales rose by 1.2% to £713 per month, surpassing the previous record high of £705 in July. It means the average rent was £27 pcm higher than in August 2010.
On a monthly basis, rents increased fastest in Wales and the South-East, where they rose by 2.1%. The next biggest increases were in London and the South-West, where they rose by 1.5% and 1.3% respectively. Rents only declined in the Midlands compared to July, falling by 0.4% in both the West Midlands and the East Midlands.
David Brown, commercial director of LSL Property Services, said: “We are in the thick of the busiest time of year for the rental market, and red-hot demand for properties is driving rents up at their fastest monthly pace in the last 12 months.
“Recent graduates moving for their first jobs have further exaggerated the long-term and growing demand from frustrated buyers. In the last two years, average rents have risen by more than £50 a month.
“With significant improvement in the number of buyers able to secure a mortgage unlikely in the foreseeable future, competition for rental accommodation will not drop and further rent rises remain on the cards.”
Brown said the scale of tenant arrears showed the pressure on tenant households.
He said: “With rents rising so quickly, soaring inflation and an uncertain economic outlook, over the long term we anticipate that rental arrears will become a growing financial problem for landlords.”
Rob Wellstead, Managing Director of multi award winning Lenwell said: “Clearly with challenging economic times, levels of arrears are likely to rise. Landlords can however mitigate their risk through vigilant referencing and credit checking of tenants and through the use of rent guarantee insurance. At Lenwell we should be pleased to advise landlords on their best options.”