By Mike Edwards

Rents rose by 1.2% in August – the largest monthly increase in a year – but tenant arrears increased for the first time since April, according to the latest buy-to-let Index from LSL Property Services plc. The average rent increase to £713 per month across England and Wales in August, surpassing the previous record high of £705 in July. This is the largest monthly increase since August 2010 with rents rising fastest in Wales and the South East, where both saw increases of 2.1%, closely followed by London (1.5%) and the South West (1.3%).

The only regions to see a monthly fall in rents were West and East Midlands where prices dropped by 0.4% compared to July. Annual figures show that London has seen the highest rental figures, with rents hitting a new record high of £1,025 per month in August, an annual growth of 6.6% equivalent to £63 per month. According to even more recent figures the average rent in Greater London according to tenant referencing specialist HomeLet has now increased to £1,202. This is an increase of 12.2% compared to the same time last year but over the same period; the average salary of tenants in the region has increased by just 2.4%.

LSL also report that annual returns on rental property improved in August after annual decreases in property prices slowed. The average total annual return in August rose to 2.6%, as capital losses diminish. However, there are signs that tenants are already feeling the strain of the rent rises as tenant arrears increased for the first time since April, with 10.7% of all UK rent unpaid or late by the end of August. This is up 9% compared to the previous month. Unpaid rent totaled £300 million across the UK in August, up 19.5% from the £251 million unpaid in July.

However, August figures always show an increase in arrears because the holiday season often takes its toll on tenant arrears, with many households squeezed by summer holiday spending. While arrears may be expected to fall back into line in the short-term, the growth is indicative of the mounting pressure facing tenants. With rents rising so quickly, soaring inflation and an uncertain economic outlook as evidenced by the recent turmoil yet again in the markets, over the long-term one can only anticipate that rental arrears will become a growing financial problem for landlords.

One Thought on “Property Landlord Advice: Rents rising in August.

  1. Alot of the problems are caused by the raising of ground rent too.

Leave a Reply

Your email address will not be published. Required fields are marked *

Post Navigation