More tenants are struggling to pay their rents on time and trying to haggle with their landlords to get rents reduced.
Four in ten (41.2%) members of the Association of Letting Agents (ARLA) this morning reported an increase in the number of tenants struggling to meet their rental payments to landlords in the six months to March 2012.
As a result, says ARLA, an increasing number of tenants are attempting to knock down the price of their rent when negotiating with landlords. Haggling has become most prevalent in the North-East and South-West, whereas it is least prevalent in London.
Ian Potter, operations manager at ARLA, said: “With unemployment predicted to rise and average rents also increasing in some parts of the country, it seems more and more tenants are finding it impossible to make ends meet. It is likely that the same is happening for landlords, who may find their mortgage rate is rising.
“At worst, this double whammy may result in landlords defaulting on mortgages and tenants being forced to move out of a property.”
In a separate report, also out this morning, property group LSL reported that asking price rents fell for a second month running. The average monthly rent in England and Wales now stands at £705.
The biggest decreases were in the South-West and East Midlands on a monthly basis, with rents falling by 1.5% and 1.4% respectively. Rents also dipped in London, falling by 0.3% – its second monthly decline in the first quarter of 2012. Rents rose in two regions, increasing by 0.7% in the South-East and 0.6% in the East of England.
Despite a monthly decrease in average monthly rents, rents have increased by 4.9% annually in London, the region with the fastest long-term growth. Despite recent declines, London’s average rent was 0.2% higher in March than at the end of 2011. The next biggest annual increase was in the East of England, where rents rose by 3.4%. On an annual basis, rents have only fallen in two locations, dropping by 2.2% in the East Midlands and 0.4% in the North-West.
David Brown, commercial director of LSL Property Services, said: “The recent dip in rents will be welcome news for tenants.
“However, drop-off in rents is likely to be short-lived. With the passing of the Stamp Duty deadline increasing the cost of moving, and banks’ funding conditions likely to limit high-value mortgage lending to first-time buyers, would-be buyers will be more reliant than ever on rented accommodation.
“As we head into a traditionally busier period for the market, a redoubling of tenant demand is likely to push rents higher once more, despite the improved supply.”
Contrary to ARLA, LSL – parent company to Reeds Rains and Your Move estate agency groups – says tenants’ arrears have been going down. In March, it estimates unpaid rent at £267m, down by 6% on February’s figure.