£691 Average Monthly Rent

By: Madalena Penny

After 9 consecutive months of rent rises, according to LSL Property Services, rents have increased a further 0.4% from September to an average of £691 per month.

While on the surface it could look as though landlords are making hay while the sun shines, the rent-savvy landlord is all to aware there’s a glass ceiling on rent rises, even if the sun does shine brightly through it.

Statistics will only indicate so much, revealing a logical direction.  However there is only uncertainty as to the affect of the impact of housing benefit cuts, which will be applied next year.

Government policies…they are a changing.

The average national household income is estimated at £25,000 per annum, if private sector rents hold at £700 per month, this would in effect account for £8,400 in rental expense per year.

The LSL property group, who own letting agents, Reed Rains and Your Move revealed through their latest buy-to-let index an average yield 4.9% on rental properties.  Incorporating house price increases, the figures are indicative of an annual return of 8.1%.  A great return on investment if you can get it.

Tenant Arrears

Again, according to LSL’s index, tenant arrears are also encouraging.  As for the second consecutive month arrears fell from £229.3million in September to October’s unpaid £221million.  Housing has become seriously more significant, mainly because there isn’t much of it about these days and tenures are increasingly shifting.

Through a lack of available housing, a growing population, social housing policy changes and restricted lending, the private rented sector has been thrown into the forefront and bearing the brunt of government blame for housing benefit rises.  Obviously, these have nothing to do with rising unemployment and are completely down to landlord armies dragging tenants off the street and making them sign LHA tenancies by pointing guns to their heads…..

With Christmas a mere month away, landlords only wishing for Santa to deliver the rent may be sorely disappointed as one of the worst periods for rent arrears approaches, it will be worth monitoring the next couple of indexes from LSL.

Investment

The greatest growth of PRS investment will probably be on the outskirts of London, where many tenants will migrate, once the housing benefit caps are introduced next April.  While the government are changing the goalposts, investment in this sector can only increase regardless of the cuts and impediments.

By closing down the regular routes of social housing and banking restrictions on mortgages a path to the private rented sector has been created and is presently the only direction tenants and would be first-time buyers can travel.