When analysing the state of the private rented sector, it's easy to look at some of the key performance indicators such as demand from tenants, monthly price and rental yields. However, it's important not to miss other indicators of how well investors can perform.
One of the aspects that can often get forgotten is rental arrears. Landlords need to be aware that arrears are a reality in the rental sector that can have an impact on how well their portfolio performs.
The good news is that the latest data suggests that the arrears situation in the private rented sector is improving at the moment, giving landlords a far better return on their investment in general.
The latest Tenant Arrears Tracker by estate agency chains Your Move and Reeds Rains, part of LSL Property Services, shows that in the past 12 months alone, the overall number of tenants who are in arrears has fallen by nine per cent.
In the September quarter, 65,200 tenants were in arrears of more than two months compared to more than 71,000 at the same time last year. The fall of more than 6,500 in the space of just a year means that 98.6 per cent of all tenants are now managing to avoid falling into rental arrears.
Overall arrears when we take into account any late payments at all now stands at just 7.2 per cent, falling from 8.5 per cent at the end of September 2013.
This is fantastic news for landlords across the country who are now bringing in the vast majority of money they are owed, giving them a much better profit level.
David Newnes, director of estate agents Your Move and Reeds Rains, said: "Gradual rent rises, on a par with inflation, have helped. But now a bigger turnaround appears to have happened. For many years more momentary cases of rent arrears have been in decline, yet it’s only recently that the most serious cases where families could actually lose their homes are following suit."