Tenant finances are in better shape too. Arrears fell sharply in July, dropping to 11.2% of all rent owing from 11.6% in June, meaning rent totalling £247million had not been paid on time.
Some 517,000 tenants were behind with their rent at the end of July, down from the 529,000 who had not paid up by the end of June. One third of these had not paid their landlord for more than a month and almost one quarter (22%, or 115,000) were facing action by their landlord to evict them.
Landlords are also having less difficulty finding tenants. Voids, the number of days a property stands empty each year, have fallen by 2.5 days in the latest period from an annualised 29.2 days to 26.7. These 2.5 extra days’ rent per year will net landlords collectively an extra £181million that would otherwise have been lost.
Yields slipped slightly in July from 5.04% to 5.02% because rent increases were outstripped by stronger house prices. But, after adjusting for the improvement in longer-term arrears and void periods, the effective yield actually rose slightly, from 4.59% to 4.61%.
David Brown, commercial director of LSL property services said: "Landlords finally have reason to celebrate after a tough eighteen months.
"There was a glut of rental supply from the middle of last year as thousands of people who were struggling to sell homes put them up for rent instead. This additional supply from those less motivated to achieve market rents forced other landlords to put prices down and led to declines in overall rental levels.
"With the housing market now recovering, the economy thawing, and tenant finances in better shape evidenced by lower rent arrears, rents are starting to rise again.
"Short-term excess supply is now disappearing from the market and landlords are filling properties more quickly. Rents are still lower than a year ago, so tenants can find good deals, but they should move quickly to snap up the best rented homes."
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