Posts Tagged ‘january’

First ever rent rises in January; Tenant arrears at 10.7%

Friday, February 17th, 2012

The rental market sprang back into life early this year, increasing 0.1% to £712 per month and the first rise in three months.

However, rental arrears hit a high of 10.7%, reflecting the poor economic backdrop.

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Annual rental inflation increased to 4.3% from 4% in December, a £30 rise in the average monthly rent in the past year, according to figures from LSL Property Services.

Rents rose the fastest on a monthly basis in the West Midlands and South West, where they increased by 1.8% and 1.5% respectively.

In London, rents rose by 0.8%, where they have only fallen once in the past 13 months. However, rents fell in four regions, with the biggest declines in the East of England and Wales, where they fell by 1.7% and 1.5% respectively.

London recorded the highest annual rental rises at 6.3%, followed by the East of England where rents rose by 5.9%, but fell in the North East by 0.7%

David Brown, commercial director of LSL Property Services, said the depth of the underlying demand for tenancies over Christmas brought greater competition for rental property and halted the usual downward pressure on rents.

“In January, activity has already moved up a gear in many parts of the UK, pushing rents up once more in a small, but significant rise,” said Brown.

“Mortgage lending has shown signs of improving in recent months, but transactions remain at almost half their historic levels, and the increasing dependency on rental accommodation will drive further rent rises over the long-term.”

Rental yields fall to 4.75% in January

Saturday, February 13th, 2010

Yields on residential property fell to their lowest levels since August 2008 as property prices powered ahead.

According to the latest buy-to-let index from LSL Property Services, yields peaked at 5.1 per cent in March 2009 when house prices reached the bottom.

Rents fell 0.5 per cent in January and are now two per cent lower than in September 2009 following the fourth month of consecutive declines. Declines were broadly spread by region. By contrast, house prices are 3.3 per cent higher.

This followed a period of more intense activity in the housing market as investors rushed to benefit from the Stamp Duty holiday. The additional supply of rental housing pushed rents lower.

LSL said total returns in January were 16.7 per cent on an annualised basis. This means a landlord would make a total return of GBP 27,500 on a typical property this year. Almost GBP 20,000 of this return would be in the form of house price inflation.

David Brown, commercial director of LSL Property Services, said: “Landlords moved fast to add to their portfolios before the Stamp Duty holiday ended in December. This has meant higher rental supply at a time of year when tenant demand is traditionally quieter. Landlords have had to cut rents in order to avoid even costlier void periods.

“Sacrificing a few pounds a month in rent to save themselves an average of GBP 1600 tax on each property bought was a very shrewd move as it would take years to recoup that saving through gradual rent hikes. Now the holiday is over, it’s crucial landlords don’t lose sight of rents. Total returns look very enticing at present as house price increases contribute a larger share of a landlord’s profit,” he said.

Rent arrears fell in January, however, from GBP 34.1m to GBP 247m in just one month. Tenants are usually slower with their December rent, holding back to smooth their Christmas cash flow, said LSL, but serious arrears held steady at GBP 24m.