Business

Rental costs and arrears falling, says LSL

To Let sign in a window
Image caption Rents fell for the second month in a row, the survey found

The cost of renting and rent arrears fell slightly in January compared with the previous month, a survey has suggested.

However, both remained at relatively high levels, the research by LSL Property Services indicated.

The average rent in England and Wales dropped by 0.3% in January from the month before to £682 a month.

Although tenant arrears also declined, 11% of all UK rents remained in arrears in January, the group said.

Demand

Many potential first-time buyers have needed to continue renting owing to difficulties in securing a mortgage.

This has pushed up demand for rental properties during the past year or so. This, added to a lack of supply of these properties, has led to greater costs for tenants.

The cost of renting in England and Wales remained 4% higher in January than a year earlier.

But crucial to the slight dip in typical rents in January was signs of a rebound in the buy-to-let sector, according to David Newnes, of LSL.

"With more products coming onto the market, there are signs that this trend is continuing into 2011, allowing a growing number of professional landlords to get onto the market - or broaden their portfolios - and take advantage of near record rental income and strong tenant demand," he said.

"International investors, too, have played their part, looking to place their cash in UK bricks and mortar while yields look attractive and properties are affordable."

In the longer term, the supply of properties could suffer from a lack of housebuilding.

Figures released by the Department for Communities and Local Government showed that 102,570 properties were built in 2010, 13% less than in the previous 12 months, and the lowest level during peacetime since 1923.

Regional picture

Mr Newnes said that fewer people tended to move in December and January, leading to some landlords lowering their rents.

However, the picture differed around England and Wales, the survey found.

Rents in the East and West Midlands increased by 0.9% and 0.6% respectively, they were up 0.8% in Yorkshire and the Humber, and 0.2% higher in London.

However, the overall drop was driven by larger falls in the East of England (down 2.5%), Wales (down 2.1%), the North West of England (down 1%), and 0.4% falls in the South West and South East of England.

Mr Newnes said that rents remained near record highs, and many household budgets had become squeezed by inflation and public sector cuts - leading to relatively high arrears levels.

Related Internet links

The BBC is not responsible for the content of external Internet sites