Rents Rise But Arrears Fall
Regardless of all the media reports about PRS rents rising for the seventh consecutive month, it also appears that the level of late or unpaid rent has fallen to the lowest level since January, equating to 8.1% of all rent across England and Wales in October 2012.
A survey by LSL property services found that although rental inflation was slowing down, the 0.4% monthly lift in October 2012 actually doubled the rise seen in the same month in 2011.
This means that UK landlords are asking for 3.4% more in rent than they were at the same point last year after seven consecutive months of rent rises, meaning rental costs for tenants now average a whopping £744 a month.
Whilst the overall rent increase is good news for landlords in the UK private rental sector (PRS) as it means they can command higher monthly rental payments while paying minimal mortgage payments, generating a healthy return on their investment (ROI).
However, the news on rental increases has not cheered all quarters with charities again expressing concerns on the increasing financial pressures being felt by tenants.
Campbell Robb, Chief Executive of Homelessness charity Shelter reckons the increasing cost “piles on the pressure” for hard-pressed families, stating “This news is yet more proof that life is becoming more difficult for renters. In a week when inflation figures revealed a tighter squeeze on family budgets, every rent rise piles on the pressure. With the property ladder remaining out of reach for many, these figures are bad news for our growing population of reluctant renters.”
However, the fall in tenant rent arrears could be down to the emergence of Rent Guarantee Insurance products being used by clever landlords to ensure uninterrupted rental income regardless of any change in the tenant’s financial circumstances.
The downward trend in rental default is good news for many landlords, who may have been facing an uncertain time as increased running and repair costs are not always met by the rental income.
Rent Guarantee is an excellent insurance product that can ease the financial headache for tenants and provide the landlord with peace of mind and a guaranteed rental income, provided that all tenant referencing conditions are met.
If you are a landlord and have yet to take appropriate action to ensure a regular rental income and safeguard your property rental business then you need to find out more about Rent Guarantee Insurance.