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April bank holidays push tenant arrears up 27%

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  • 20/05/2011
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April bank holidays push tenant arrears up 27%
Consecutive bank holidays in April contributed to unpaid rent across the UK soaring nearly 27% to £284m, according to LSL Property Services.

Its buy-to-let index showed this was up from £224m of rental arrears in March.

David Brown, commercial director of LSL Property Services, said: “The final bank holiday of the month delayed many rental payments, but on top of this, thousands of tenants took advantage of the opportunity and booked holidays, which has impacted on the timely payment of rent.

“Nevertheless, despite the short-term factors, landlords need to remain especially vigilant over the medium term. We are yet to see the true picture emerge from public sector spending cuts, and changing employment situations will hamper many tenants’ ability to meet their monthly rent cheque on time.”

LSL’s buy-to-let index showed that the average rent in England and Wales rose by 0.8% to £692 a month in April, matching the record high reached in November 2010.

The growth means that rents are now 4.4% higher than a year ago, the highest annual inflation since November 2010.

The average yield reached 5.1% in April as rents increased at a faster rate than rental property prices.

Brown said: “The rental market is heating up as thousands of would-be tenants have taken advantage of the weather and long weekends to hunt for new rental homes. Even a slightly stronger supply of property has failed to cool rental inflation as landlords take advantage of the growing number of mortgage products available.

“Competition is fierce and tenants are paying a premium to secure properties. The average landlord is charging nearly £30 more a month than a year ago, and the rate of increase is unlikely to tail off as lending to first-time buyers remains subdued.”

Monthly rents in London soared at the fastest pace in the country over the past year, increasing by 7.9% since April 2010, reaching £988 in April 2011.

The second highest rise has been in the South East, which saw monthly rents increase by 5.7% in the past year to £705.

Only the East of England has seen rents decline in the past year, falling slightly by 0.8% to £709 per month.

Meanwhile, LSL reported that its trading has been in line with expectations for the period 1 January 2011 to 17 May 2011, despite a challenging month in April.

Turnover at its estate agency business grew by 11% year-on-year during the three months to the end of March and by 7% during the four months to April.

It said its estate agency arm had increased its market share during the first part of the year while it had also seen good growth in income from lettings and financial services, particularly from the former Halifax estate agency branches, which it acquired in January last year.

But LSL’s surveying arm, which carries out mortgage valuations for lenders, performed less well, with turnover dropping by 5% during the four months to April compared with the previous year.

The group added that it remained cautious about the housing market for 2011.

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