Buy to let rents are continuing the surge upwards by rising for the fifth consecutive month to a new peak of an average £734 per month in August.
Rent arrears fell for the first time in three months, with 9% of total rents late or unpaid as rents climbed by 1.2% from July.
Although the UK average is heading up, rents fell in Wales and the West Midlands, the research from letting agents LSL Property Services showed. The firm operates brands like Your Move and Reeds Rains.
London has seen the fastest rent rises in the past 12 months, with rental inflation at 4.9%.
LSL Property Services director David Newnes said: “The rental market is right in the thick of peak season, and the demand from graduates and those starting new jobs has added a new layer of competition on top of the existing pool of frustrated buyers.
“London and the South East may be the powerhouses of the national rental market, but rent rises haven’t been limited to these areas by any means. In fact, rents have hit record highs in five regions as tight mortgage finance criteria and large deposit requirements for new buyers continue to ramp up the pressure on the limited stock of rental homes available.”
Yields for property investors rose to 5.3%, up from 5% in July. In cash terms, this is an average return of £8,716, split between rent of £7,853 and a rise in value of £863.
If rental property prices maintain the same trend as the past three months, landlords should expect an annual return on investment of 9.2% per property over the next 12 months – equivalent to £15,191 per property.
Rent arrears also improved in August, with 9% of all rent late or unpaid at the end of the month, down from 9.3% in July. Late or unpaid rent added up to £288 million, 2.2% less than in the previous month.
“It’s encouraging to see tenant arrears fall for the first time in three months, despite the summer holiday season. A surprisingly resilient labour market, alongside a more stringent approach to referencing and credit checking by landlords, has helped prevent further rental arrears,” said Newnes.
