Rent Guarantee Insurance
Reduces Landlord Rent Arrears Worry
Private rental sector rent rises slowed down in May and even tenant rent arrears are falling as more landlords use Rent Guarantee insurance to protect the rental income.
According to LSL property services, the UK private rental sector (PRS) is still growing, with the number of new tenants up by 3.4% in May compared to April and up by 5.1% when the figures are analysed on a year on year basis.
However, LSL reckon that tenant demand for rental property would have been higher still had it not been for a flurry of first-time buyer activity caused by the launch of the Help-to-Buy scheme.
Tenant rent arrears are falling, in part, due to the wider use of specialist insurance products designed to guarantee a rental income should the tenant default on payments due to a change in financial circumstances, however the landlord does have to reference the tenants before taking out the rent guarantee insurance.
Private sector rents increased by just 0.1%, taking the average monthly rent paid by tenants in England and Wales to around £737 (GBP) per month.
Six out of ten UK regions saw rents increase during May 2013.
The fastest increases were:
- East Midlands – rents up by 0.4%
- North-West – 0.3% monthly rise
- London – rents up by 0.2%
- South-East – 0.2% monthly rise
- East of England – rents up by 0.2%
However, there was also a fall in rental prices in some parts of the UK compared to rental prices in April:
- Rents in Wales fell by 0.7%,
- Rents down 0.4% in the West Midlands
- Rents in Yorkshire and the Humber down by 0.3%
There is still some significant variation in the rate of rent rises if the figures are viewed on an annual basis, and rents are higher in 9 out of 10 regions with only the South-West seeing no change since May 2012.
The biggest increases were :
- London Rents – 7.2% higher than in May 2012
- Wales – 5.2% higher than May 2012
- North East – 4.0% higher than May 2012
The average yield from a rental property was 5.3% in May 2013, a slight increase when compared to yields of 5.2% in May 2012 and more landlords are taking the precaution of protecting the increasing rental income by selecting only the best tenants and insuring the rent using rent guarantee insurance.
Total tenant rent arrears in May 2013 were £276 Million (GBP), compared to £282 Million (GBP) in April 2013. This equates to 8.2% of all UK rent, down from 8.4% in April 2013, showing how rent guarantee insurance is helping to satisfy landlords peace of mind and bank balance.