The Rising Cost of Rent

by Mark Johnston

In the current financial climate increasing numbers of people are being priced out of the housing market, this coupled with the shortage of social housing means that renting is fast becoming the only option.

According to David Newnes, LSL’s estate agency managing director it is the busiest time of year for the rental market and high demand for properties is driving up rents at a fast pace. With tenants paying 1.2 percent more in August 2011 than in July 2011.

Mortgage scarcity and unaffordability continue to cause havoc across the rental market.

Director of rental property website, Jonathan Moore, said “in the last 12 months nearly 200,000 more first time buyers have had to rely on rental accommodation rather than being able to buy with a mortgage”.

Grant Shapps, housing minister stated that “the trebling in house prices from 1997 has locked too many out of owning their own homes”.

In the last 2 years average rents have risen by more than £50 a month, the average tenant is now paying approximately £713 a month.

With high deposits needed to secure mortgages and lending criteria getting even stricter many more people are been forced to rent, putting tenants in a vulnerable position.

Landlords are now firmly in the driving seat with high demand for rented properties allowing them to push rents ever higher. It is a landlords market making it tough for those trying to secure rented accommodation.

There are now 3.4 million rented homes in England alone; this is up from 1.7 million in the late 1980s.

London has seen the biggest rent rises in England and Wales, with only fall seen in Yorkshire and the Humber where they dropped 0.5 percent in the last year.

At the same time as rents are increasing so is rent arrears, with 10.7 percent of rent unpaid or in arrears in August 2011, making it approximately £300 million owed by tenants as they continue to feel the squeeze on their finances. However LSL estate agency says that the August rise in arrears is merely a seasonal phenomenon.

David brown, commercial director at LSL adds “while we expect arrears to fall back into line in the short term, with rents rising so quickly, soaring inflation and an uncertain economic outlook, long term rental arrears will become a growing financial problem for landlords.

Those forced to live in rented accommodation could not only suffer from rising rents, but unscrupulous landlords too. The industry is massively under regulated, you do not need a licence to be a landlord and there is no mandatory training. Housing and homelessness charity Shelter has seen overall complaints about landlords increased by 23 percent over the past 12 months. With this news Shelter has warned that millions of families may be at the mercy of rogue landlords.

With out significant improvements in the number of buyers being able to secure mortgages in the future it seems unlikely that rents will drop and instead further rises remain on the cards.

Story link - The Rising Cost of Rent

Related stories to : The Rising Cost of Rent