Rent arrears fall to record low

The proportion of landlords experiencing rent arrears has dropped to its lowest level on record, new data suggests.

Research by Pegasus Insight on behalf of Paragon Bank, claims that 26% of landlords reported rent arrears in the past 12 months during the three months from April of this year.

It is down four percentage points from 30% in the previous three months.

Profitability also improved, with 86% of landlords reporting a profit from their lettings activity, up two percentage points on the previous quarter.

Meanwhile, average gross rental yields reached 7.02% during the same period.

Landlord pressures

The figures come despite the introduction of the controversial Renters’ Rights Act, which prompted speculation around the long-term viability of landlords’ portfolios.

Lisa Steele, Mortgage Lending Director of Paragon Bank, (pictured), says: “We often hear about the pressures facing landlords, whether that’s economic uncertainty, regulatory change or the wider costs associated with running and maintaining properties.

“What’s sometimes overlooked is that the overwhelming majority of tenancies work well and continue to provide reliable income for landlords.

“Record-low arrears, strong levels of profitability and healthy rental yields are all signs of a sector that continues to demonstrate resilience despite a challenging backdrop.”

Record-low arrears, strong levels of profitability and healthy rental yields are all signs of a sector that continues to demonstrate resilience despite a challenging backdrop.”

She adds: “It’s understandable that landlords remain cautious about factors such as the wider economy and future market conditions.

“However, when they look at the performance of their own portfolios, the picture is generally much more positive.

“Most tenants continue to meet their rental commitments, most landlords report operating profitable businesses and those are the factors that have the greatest influence on day-to-day confidence.”