by Mark Johnston
Rents Remain High!
It seems that rental values are still being underpinned by the increasing number of people living in the private rented sector and rents are likely to continue rising unless supply and demand becomes more aligned.
The surging tenant demand has been heightened by first time buyers who are unable to get on to the property ladder due to stricter mortgage lending criteria, has seen rents increase for the fifth consecutive month, according to the latest LSL Buy to Let Property Index.
Despite mortgage payments being at a 15 year low securing a mortgage still remains difficult and more people are turning to the private rented sector when moving to a new home. This has caused an increase in demand, shortage in housing supply and increasing, and now record rents.
Figures earlier this year showed the proportion of households renting their homes from private or public sector landlords had increased, to 34 per cent of households.
Nick Dunning, group commercial director at Countrywide, said: “ we have on average 4 to 5 tenants for every rental property we are marketing.”
While the lack of supply of rental property is making it more difficult for tenants to secure a tenancy, it is helping to boost yields for landlords.
Rising rents saw the average yield for property investors increase to 5.2 per cent in June, up from 5.1 per cent in May.
Recent figures have revealed that rents have continued to rise across England, Scotland and Wales, hitting a two year high in July.
Countrywide’s lettings index found that average rent in the three nations has reached £866, the highest level seen since the start of 2011.
Data also reveals that rents were up 2.1 per cent in August , while those in the capital are rising even faster at 2.3 per cent to £1,272.
Researchers have suggested that these figures represented ‘the highest average UK rental amount on record’.
The private rented sector offers a fantastic housing solution to millions of people within the UK, especially during the so-called housing crisis. However, record rents, and stagnant income means some tenants are out of pocket and unfortunately not able to meet living costs, according to a recent Money Advice Service survey.
Analysis shows that tenants’ income is not keeping pace with rental inflation, a recent survey showed that the average tenant’s income rose by just 0.8 per cent to £28,000 a year.
Ian Fraser, HomeLet’s managing director, said: “ tenants are being stretched more than ever, and it will be interesting to see how long they will be able to afford these continually rising living costs.”
Housing charity Shelter described the rental market as ‘out of control’ and adds that “What many forget is the devastating impact that every rent rise has on families who are forced to cut back further on food and other essentials.”
A current report from online property portal Rightmove shows 60 per cent of tenants expect to pay higher rents over the next year, with many anticipating much higher rents in London and South East.
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