Rents rocket to new high as tenants 'lengthening stay in PRS'

Published by 24publishing for 24dash.com in Housing and also in Central Government, Local Government, Universal Credit

Rents rose in seven regions across England and Wales last month and have hit a new high of £741 a month, according to the latest buy-to-let index from LSL Property Services.   

It is now 18 months since the Government introduced caps to the Local Housing Allowance (LHA) which ministers said would see rents in the private rented sector come down.

The average rent rose by 1.1% in September surpassing the previous record high of £734 in August. The figure represents a 3.2% increase compared to this time last year.

LSL said rents had risen across seven regions with London and the South East seeing the strongest increases. Average rents in London have reached a record of £1,092 a month. Three regions saw falls in September: the East of England, Yorkshire & the Humber, and the West Midlands.

David Newnes, director of LSL Property Services, said: “Rents have risen consecutively for half a year as tenant demand strengthens on the back of a historically subdued mortgage market. However, every pound monthly rents go up by is another pound that renters can’t save for a deposit for their first home. This is lengthening their stay in rented accommodation, and increasing competition in the private rented sector.”

“New tenants may see some relief in coming months as the rental market exits its peak season – the rental market tends to cool in the final part of the year. However, over the long-term, any sustained fall in rents will be closely tied to a consistent and significant improvement in lending at higher LTVs to prospective first-time buyers.”   

Tenant finances deteriorated slightly, after seeing an improvement in the previous month, LSL said. It reported that 9.1% of all rent was late or unpaid at the end of September. However, this remains below the average of 9.5% seen in the previous 12 months. In total, late or unpaid rent amounted to £297m, 3% more than in the previous month.

Newnes added: “September’s rise in rental arrears looks like a bit of a set-back for tenants’ finances, but arrears are still down on the average seen in the last twelve months. That things aren’t much worse is testament to the stringent scrutiny applied by landlords as well as a reflection of the higher proportion of tenants who are financially robust yet unable to secure the mortgage finance necessary to leave the sector.

“Nevertheless, it’s clear that the monthly rent cheque is taking up a larger and larger chunk of a tenant’s disposable income and landlords cannot afford to drop their guard against potential payment problems.”