Rent levels have reversed a four-month downward trend, to stand 4.2% higher than a year ago.
Last month, average rents in England and Wales rose 0.5% compared with February, to stand at £735 a month. Less good news for landlords was that tenant finances worsened, with 8.5% of all rent now in arrears.
The latest data, from LSL – parent company of Your Move and Reeds Rains – says that March’s rise in rents was the first since last October. LSL said it expects the upward trend to continue.
Rents were higher on a monthly basis in six out of ten regions. The strongest growth was in London where a 1.3% monthly rise took rents in the capital to a fresh record, averaging £1,106 per month.
This was followed by the North-East where rents grew 0.9% compared to February, while in Yorkshire and the Humber rents increased by 0.6% on a monthly basis.
Rents dropped the fastest in the South-West, falling 0.5%, followed by Wales where the fall was 0.4% in a month.
The total annual return on a rental property rose to 6.3% in March. This represents an average return of £10,329 with rental income of £7,751 and a capital gain of £2,578. The average yield on a rental property was 5.3% in March, compared to 5.2% in March last year.
If rental property prices maintain the same trend as the last three months, the average investor in England and Wales could expect to make a total annual return of 10.9% per property over the next 12 months – equivalent to £18,173 per property.
The total amount of rent late or unpaid worsened. Total arrears in March were £284m, up £36m from £248m in February. This equates to 8.5% of all rent across England and Wales, compared to 7.4% of all rent in February.