Rents bottoming out

Nia Williams

July 27, 2009

Overall, average rents rose to £649, up just a fraction of 1% compared to the previous month, leaving them 3.4% lower than August 2008 when rents reached their peak. A year ago by contrast, rents were rocketing far ahead of inflation, increasing over 7%. Yields ticked up in June to 5.1%, reaching their highest point in five years. Compared to May, rents in the capital rose fastest in June, up 1.7% to £900, while those in the North West slid 1.4% to £526 per month. Over the last year, tenants in the South East are celebrating rents falling by 6.6%, while in Wales, landlords have increased rents by 4.9%.

The news on arrears was more mixed. The total amount of unpaid rent in the UK rose by £1.5m in June to just over £254m. But the total number of tenants who were behind with their rent actually fell, from 557,000 in May to 529,000 in June. Typically tenants in arrears are lower earners living in cheaper rental homes. However, in the last six months, there has been a shift with those on in more expensive rental property now also falling behind with their payments. In January the average tenant in arrears typically paid two thirds (66%) of the average rent. Now a typical tenant in arrears lives in a home costing three quarters (76%) of the average.

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