Tenant finances were in their best shape in at least two years, with arrears dropping to just 10.1% of all rent. This was a fall from 11.2% at the turn of the year, and is the lowest level since LSL Property Services plc began compiling the figures in 2008. In March, £227.3m of rent was unpaid – a substantial drop from its peak of £361m in August 2008.
David Brown, commercial director of LSL Property Services plc says: “We’re not just seeing an improving picture for landlords – but tenants too. The performance of arrears was a surprise story of the recession, and they have exceeded expectations again in the first quarter of 2010. The economy is recovering – albeit ponderously. Fewer tenants are losing their jobs, or seeing pay-cuts and falling behind with their rent. The improved situation with tenant arrears has meant that although house prices have risen, when void periods and arrears are considered, the effective yields landlords receive on property investment have actually snicked-up in the past month in real terms.”
The total return from investing in buy-to-let over the last twelve months reached 13.3% in March, with the average landlord making a total return of £20,580 in the past year. Total annual returns have now risen for 13 consecutive months. A landlord investing today can expect to make an annual return of 10.7% over the next twelve months. This is equivalent to £17,964 on a typical property.
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