The first quarter this year has been a strong indicator as to the national residential rental trends being established across England and Wales. As you would expect residential rents have risen in much of the UK’s rental hotspots and tenant arrears have fallen as first-time buyers flooding the rental sector set the trend for tenant behaviour raising standards.
LSL Property Services data for March 2011 suggests a line emerging – one, which is creating a north-south divide. With a 0.4% increase in rents across much of England, averaging out at £687 pcm, there are some regions experiencing a decline.
While London continues to outstrip regions for it’s rental demand, rents are reported to have increased by a massive 7.3% and the rest of the South East is clearly following London’s trend by a 6.7% rise. Meanwhile Humber, Wales and Yorkshire were affected by a 1.3% fall in rental prices along with a 1.6% fall in the South West. While rental values decline in these areas, house purchase transactions in the South West and Wales are increasing according to RICS surveyors.
Defaulting tenants are also on the decline. After December’s usual increase in rent arrears, unpaid rent for March 2011 has experienced a noted drop in national levels, resting at £224m, the lowest since October 2010. As RICS are reporting a fall in national house selling instructions, rents are reflecting the ongoing demand resulting from such a decline.
As is expected with continued and increased demand, the lending sectors is somewhat cautious, but are clearly optimizing services and products surrounding a steady rental trend. Paragon have revealed more than a 50% rise from their advisors in what appears to be a positive outlook in BTL lending conditions. Compared to the first quarter last year with only 142 BTL products available, Q1 2011 reports 298 products on the market.
It’s still a long way from the 3000 products available in 2007, but as lenders confidence increases in the private rented sector and the coalition government begins to stabilize rental conditions, landlords should be able to find conditions more favourable and allow them to expand portfolios with a lot more ease.