Private sector rents up 4% in a year with further hikes predicted - RICS

Published by Jon Land for 24dash.com in Housing

The cost of renting a home in the private sector has risen by more than 4% in the last year as would-be buyers continue to find themselves locked out of home-ownership, according to figures published today by RICS.

According to the RICS Residential Lettings Survey (May – July 2012), the cost of renting a property has grown by 4.3% over the last 12 months, based on data from chartered surveyors across the UK.

And there's a similar outlook for the next 12 months, with respondents to the RICS survey predicting an average rise of 3.9% between now and next July.

According to RICS, the upward march in rents continues to be underpinned by a shortage of good quality properties for tenants to move into. In the three months to July, the amount of new properties coming on to the market was little changed compared with the preceding period; a net balance of 2% more surveyors reporting falls in new instructions to market.

Meanwhile, demand continues to grow, albeit at a much slower pace than in recent quarters, as 4% more respondents reported rises rather than falls in interest from potential tenants (from +14%). Significantly, the increase demand has outpaced the change in supply in every quarter since the first half of 2009 although the gap does now appear to be narrowing.

Across the country, strong regional variations were apparent. The North West saw rents increase by the biggest margin with values growing by 6.9%, whereas surveyors in Wales reported that rents had in fact stayed at the same level over the last 12 months.

Peter Bolton King, RICS Global Residential Director, commented: "It is interesting to see that the huge growth we have seen in demand in recent years has started to gradually slow. While tenant interest is still riding high, what remains to be seen is whether many are willing to meet the increasing rents being demanded by landlords.

"However, it is clear that we have seen rents grow steadily right across the UK for some time. This is partly down to the problem of the scarcity of mortgage finance and the large deposits required by lenders.

"These barriers to home ownership need to be addressed alongside the shortage of new stock coming to the market."