Tenants are managing to pay down rent arrears even though rent is increasing, according to research from Your Move and Reeds Rains.
The average rent across England and Wales was £770 per month in October, or £12 more than October last year, and just £2 more than September. Slower rent rises have coincided with healthier tenant finances, with rent arrears approaching all-time lows.
Tenant finances
Tenant finances improved in October, with just 6.9 per cent of all rent in arrears, down from 7.2 per cent in September and 7.1 per cent last October. Levels of the most severe tenant arrears – where they are more than two months behind on rent – have also improved slightly, the lettings agency says.
Yields and Returns
The gross yield on a typical rental property in England and Wales now stands at 5.1 per cent as of October, the same as in September, but down 0.3 percentage points from the 5.4 per cent of October last year.
Taking into account price growth and void periods between tenants (but before costs such as mortgage repayments) total annual returns on an average rental property now stand at 13.3 per cent over the twelve months to October. This is a return to the same level as was reached in August 2014 – or the joint-highest on record.
In absolute terms the average landlord in England and Wales has seen a return, before deductions such as mortgage payments and maintenance, of £22,434 in the last twelve months. This is made up of rental income of £8,404 and an average capital gain of £14,030.
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