by Mark Johnston
In today’s current climate rents inEnglandandWaleshave been steadily increasing as more and more people are unable to get on to the housing ladder.
With lenders still keeping a tight grip on residential mortgage finance the backlog of potential buyers confined to the rental sector has pushed demand for rental property astronomically high, which has then supported high rental charges.
Therefore as rents continue to rise many would be buyers remain trapped in the rental sector. Suggestions have also been made by some experts that some people are now also choosing to rent because of uncertainty surrounding the housing market.
Peter Bolton King, global residential director at the Royal Institution of Chartered Surveyors (RICS) said “rents have grown steadily right across the UK for some time”.
Rents and tenant demand do however vary locally and local unemployment and cuts in public spending can impact on tenant’s ability to pay. Some research has shown that 10.7% of all rent was either late or unpaid at the end of 2011.
Whilst LSL Property Services said that in January 2012, on a monthly basis rents were starting to plateau, other reports show that the average rent has jumped by 4.3% in the last year to £718 per calendar month. This is just £2 below an all time record.
Rents inLondon however have hit a record high of £1,047 per month, which shows a yearly increase of 7.1%. The average rent therefore is approximately £29 per calendar month higher than July 2010.
However, research by HomeLet, theUK’s biggest supplier of tenants, showed the average rent to have increased to £768 per month.
The Royal Institution of Chartered Surveyors (RICS) has suggested that a scarcity of mortgage finance and a shortage of good quality properties are likely to drive rents up further.
Some experts believe that the gap between demand and supply is now shrinking which suggests that the increase in rental value may begin to slow as the year wears on.
However, the Royal Institution of Chartered Surveyors (RICS) has forecast that house prices will continue to decline over the course of 2012 and this could than lead to even more people turning to the lettings market, which would again boost rental demand.
David Newnes, estate agency managing director of LSL Property Services, said “rents are on an upwards trajectory and it is unlikely that tenants will gain any respite any time soon”.
It seems therefore according to 2 reports on the property market that buy to let investors are set to make steady returns over the next 13 years as rising rents and a housing price recovery, boost the sector.
In conclusion as the financial squeeze on tenants who are already stretched to their limits, looks set to increase, barriers to home ownership and the shortage of affordable housing need to be addressed now more than ever.
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