Landlords are seeing greater returns as property prices rise. However, rent arrears are also on the up, according to the latest Buy to Let Index from Your Move and Reeds Rains.
While new landlords and those expanding their portfolios may have rushed to beat the 1st April Stamp Duty deadline, this surge in activity has boosted returns for existing property investors, says the data.
Those that haven’t added to their portfolios recently have seen their total annual returns rise to 12.2%. This is up by 10.7% from February, and is also the fastest rate of return for existing landlords recorded since November 2014, when returns reached 12.3%.
Although property prices have increased, boosting total returns, rental yields have in fact fallen, from 5.1% last year to 4.9% in March.
Slightly more concerning data, however, is that rent arrears rates were also up in March. Across England and Wales, the overall level of rent arrears is now at 9.1% of all rent due in the private rental sector, compared with 8.8% in February.
This is up from 7.4% in March last year, but it still much lower than the record high of 14.6%, which was seen in February 2010.
The Director of Your Move and Reeds Rains, Adrian Gill, comments: “Landlords need tenants with sound finances, and tenants need a property they can afford. While there is always room for healthy negotiation on rents, both landlords and tenants need each other to reach a deal. So some of the language of confrontation between landlord and tenants is not healthy or constructive.
“For private renting to remain an affordable option and a high quality home for millions, the answer is more supply and more choice. That means lifting the barriers to investment in property, rather than adding fresh penalties for landlords aspiring for their own financial security.”
He adds: “Good landlords also understand that their interests and the interests of their tenants are aligned – a tenancy should be a mutually beneficial deal.”1
If you are an existing or new landlord and are concerned about your tenants falling into rent arrears, you should protect your rental income with Rent Guarantee Insurance, which ensures you still get paid if your tenant defaults.
It is always a good idea when starting a new tenancy to revise your rent price and set the perfect rent for your property. We have tips on how to find the ideal price: https://www.justlandlords.co.uk/news/setting-perfect-rent-price-property/