Ljs: Rents hit record high as first-time buyers forced to wait

Friday, May 20, 2011

Rents hit record high as first-time buyers forced to wait

Cost of renting a home rose 0.8% in April last year to �692 as would-be buyers save up for sizeable deposits

A spring surge in demand from tenants pushed rents back up to record high levels during April. The typical cost of renting a home jumped by 0.8% during the month to �692, matching the record reached in November last year, before rents suffered a seasonal downturn, according to the UK's biggest letting agency network LSL Property Services.

The latest jump has left rents 4.4% or �30 a month higher than they were in April last year, the strongest annual growth rate since November 2010.

LSL said rents strong tenant demand was continuing to push up rents, as would-be buyers were forced to put plans on hold while they raise the substantial deposits they need. It added that a slight increase in the number of properties available to let had failed to cool the market.

David Newnes, the estate agency managing director of LSL, said: "The rental market is heating up as thousands of would-be tenants have taken advantage of the weather and long weekends to hunt for new rental homes.

"Even a slightly stronger supply of property has failed to cool rental inflation as landlords take advantage of the growing number of mortgage products available.

"Competition is fierce and tenants are paying a premium to secure properties. The rate of increase is unlikely to tail off as lending to first-time buyers remains subdued and demand for rental homes is stronger than ever."

Since May 2010, the number of couples looking to share a flat with other tenants has nearly doubled, increasing by 91%. Now, couples looking to live with housemates represent 11% of all flat-hunters, according to easyroommate.co.uk's analysis of more than 60,000 room rentals around the country, and 35,000 flathunters' profiles.

Couples typically pay a premium for sharing a room. The average room available to couples costs �426 per month, a 2.6% increase from the cost a year ago (�415). This is 6% (�24) more than what a single occupant would pay a month.

The rental market was not buoyant in all regions of England and Wales during April, with landlords in the north east cutting the amount they charged by 0.7% during the month, while those in the south east and East Midlands reduced rents by 0.1%.

The south west saw the biggest jump in the cost of being a tenant, with rents increasing by 1.7%, followed by a 1.6% rise in the East of England and a 1.4% rise in Yorkshire and the Humber.

Rents in London are now 7.9% higher than they were a year ago, while in the south east they have risen by 5.7% ? but in the east they are 0.8% lower.

The number of tenants struggling to keep up with their rent increased during April, with 11.8% of money unpaid at the end of the month, the equivalent of an estimated �284 million, 27% more than in March.

The group attributed the rise in rental arrears to the bank holidays, with the end of April falling on the May bank holiday weekend, which it said delayed payments.

But it added that many tenants also took advantage of the time off work to go on holiday, which is also likely to have affected their ability to pay.

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