Rents rose for a third consecutive month in June, as tenants’ arrears grew.
A total of 9.2% of rent was late or unpaid, according to the latest Buy-to-Let Index from LSL Property Services, which owns national chains Your Move and Reeds Rains.
In total, it estimates that unpaid rent in June amounted to £289m.
In June, the average rent in England and Wales rose by 0.9% to £718 per month, just shy of the record high of £720 pcm last October, and 2.4% higher than in June last year.
On a monthly basis, rents rose in all regions of England and Wales but one. Wales saw the largest rise, with rents increasing by 2%, followed by the North-West and West Midlands where rents rose by 1.7%. But rents dipped in the South-West, falling by 0.3%.
Following a rise of 0.9% to £1,047, London’s rents hit a new high for the second month in succession.
London remains the region with the fastest annual rental growth. Rents in the capital climbed 4%, with tenants paying an average of £41 extra per month compared with June 2011. The South-East had the second highest rental inflation, with rents climbing 3.6% compared to a year ago. On an annual basis, rents remained in negative territory in just the East Midlands after the North-East and Wales returned to growth.
David Brown, commercial director of LSL, said: “The sheer weight of tenant demand continues to push up rents across the country.”
Landlords saw the average total annual return on a rental property rise to 5.4% in June, up from 5.2% in May. This represents an average return of £8,884, with rental income of £7,719 and a capital gain of £1,166.
If property prices maintain the same trend as the last three months, an average investor in England and Wales could expect to make a total annual return of 7% per property over the next 12 months – equivalent to £11,538 per property.
Overall rental arrears deteriorated in June, with 9.2% of all rent late or unpaid at the end of the month, an increase from 8.9% in May. In total, unpaid rent in June amounted to £289m, an increase of 5% from £275m late or unpaid in the previous month.
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