Sign up to our Editors Choice newsletter now! Click here

Private sector rents hit record high in July as tenants feel the pinch

Accessibility Menu

Menu Search

24dash - The UK's most up-to-date social housing and public sector news website

Private sector rents hit record high in July as tenants feel the pinch

24DASH.COM Logo

Published by Jon Land for 24dash.com in Housing and also in Bill Payments

Private sector rents hit record high in July as tenants feel the pinch Private sector rents hit record high in July as tenants feel the pinch

Private sector rents rose to a new record high in July, according to the latest Buy-to-Let Index from LSL Property Services.

Figures show average rents in England and Wales in July rose by 1% to £725 per month, surpassing the previous high of £720 in October 2011.

On a monthly basis, rents rose in eight out of 10 regions in England and Wales. Rents in the South East climbed the fastest, increasing by 2.2%. The West Midlands saw the next largest increase, rising by 1.8%. But rents fell by 0.4% in both the South West and the East of England.

London’s rents, meanwhile, hit a new high for the third consecutive month, with a 1% increase to £1,057.

On an annual basis, rents fell in two regions - decreasing by 1.2% in the South West, and 0.4% in the East Midlands. However, rents in London have climbed by 4.8% year-on-year.

David Newnes, director of LSL Property Services, said: “The backlog of frustrated first-time buyers in the private rented sector showed no sign of clearing in July – in fact, it is still growing. As lending to those without substantial deposits remains depressed, demand for rented accommodation can only go one way in the long-term – providing further upwards momentum for rents.

"The rental market is also entering its summer peak, as recent graduates and those with new jobs begin to look for new accommodation. With more tenants on the move, alongside long-term underlying demand, fierce competition for properties is enabling landlords to increase rental prices to new highs.

He added: “Rents have returned to record highs, average yields have hit their highest level this year, and returns are healthy, tempting many investors into the market. Banks and Building Societies are tapping into this robust demand, and buy-to-let is the only sector of the mortgage market showing consistent growth, with lending increasing 18% year on year.

"It’s crucial that lenders continue to increase their commitment to property investors to allow the private rented sector to expand at the rate needed to accommodate the growing number of frustrated would-be buyers.”

Tenant finances deteriorated for a second consecutive month in July, with 9.3% of all rent late or unpaid at the end of the month, an increase from 9.2% in June. In total, unpaid rent amounted to £295m, 2% more than the £289m late or unpaid in the previous month.

Newnes said: “With the economy still in recession, and rents climbing to a new record high, the minority of tenants experiencing difficulty in meeting the monthly rent cheque on time is steadily climbing.

"However, this has not yet fed through into increased mortgage arrears for landlords, with the number of buy-to-let mortgages over three months in arrears actually falling compared to last year.

“Question marks remain over whether there is worse to come from the economy and the labour market. If conditions deteriorate, placing more tenants’ jobs at risk, and rents continue to rise, rental arrears are unlikely to see any sustained long-term drops.”

READ NEXT ยป

Close Fact or Fiction: Birds

Fact or Fiction: Birds

Comments

Login and comment using one of your accounts...