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UK rents soar to all-time high

The average monthly rent is now £713 a month and further increases are on the cards, according to LSL Property Services.

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by Victoria Bischoff on Sep 16, 2011 at 10:53

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The cost of renting in the UK rose at a record rate of 1.2% in August, hiking the average rent to an all-time high of £713 a month, new research today revealed.

This is the seventh consecutive monthly rise and the biggest increase since August 2010, according to LSL Property Services, which offers a range of services to both consumers and mortgage lenders such as estate agency and valuations.

At 2.1% rents rose fastest in Wales and the South East, followed closely by London and the South West with respective rises of 1.5% and 1.3%. The Midlands was the only place to report a fall in rents in August, dropping 0.4% in both the West Midlands and the East Midlands.

London meanwhile saw the biggest annual increase in rents – up 6.6%, or £63 a month, to hit a new record high of £1,025 per month in August. The West Midlands and the North East were next in line with increases of 6% and 4.3%. The only places to report a fall in rents over the past year were Yorkshire and the Humber.

David Brown, commercial director of LSL Property Services, said: ‘Recent graduates moving for their first jobs have further exaggerated the long-term and growing demand from frustrated buyers’.

‘With significant improvement in the number of buyers able to secure a mortgage unlikely in the foreseeable future, competition for rental accommodation will not drop and further rent rises remain on the cards,’ he added.

While the news may come as a blow to struggling tenants, landlords will be pleased to see that the total annual returns on a rental property increased in August to 2.6%.

What’s more, according to the survey, if property values maintain the same trend as the last three months an investor could expect to make a total annual return of 10.5% over the next year – the equivalent to £17,381 per property, LSL Property Services said.

Tenant arrears however increased for the first time since April, with 10.7% of all UK rent unpaid or late by the end of August – up from 9% in July. LSL Property Services however claims this is a ‘seasonal phenomenon’ and expects arrears to fall back into line in the short-term.

Brown however added: ‘While we expect arrears to fall back into line in the short-term, the growth is indicative of the mounting pressure facing tenants. With rents rising so quickly, soaring inflation and an uncertain economic outlook, over the long-term we anticipate that rental arrears will become a growing financial problem for landlord’.

Earlier this week meanwhile the government and Royal Institution of Chartered Surveyors (Rics) both reported a fall in house prices. With the average UK house now costing £207, 690, according to the Department of Communities and Local Government, and mortgage finance still difficult to come by however first time buyers are still struggling to get a foot anywhere near the property ladder.

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3 comments so far. Why not have your say?

my experince shows that rents and demand are riseing

my waiteing list has grown to double it was last year

at present im not grumbling one bit

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With house prices 25 % over valued and rents at a all time high, real incomes falling and consumer confidence low something will have to give.

These high rents are unsustainable, tenants will default on rent and landlords will default on buy to let mortgages, there will be distressed sales further correcting house prices. As house prices are corrected people will be able to afford to buy and when people can afford to but they won't need to rent. and rents will come down.

These these high rents are a bubble that will burst the same way the house price bubble burst in 2007

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Paul Barrett

Sep 19, 2011 at 01:35

I think that landlords will start to be more risk adverse in the tenants they take on.

Therefore any prospective tenant who fails the relevant credit checking etc; which is vital for Rent Guarantee Insurance will be rejected by that landlord.

This as it can take up to 1 year to evict a non-rent paying tenant.

Therefore any landlord would be mad to take a risk on a non-RGI qualifying tenant.

Such landlords will also use the www.tenantid and www.landlordreferencingservices.co.uk

Also they will need to use tha licenced credit checker to qualify their tenant for RGI.

As this only works out at about £9.00 per month for a year for £50000.00 per claim with www.justlandlords.co.uk; there are other RGI companies this will surely be the way landlords source new tenants and therefore will not suffer the risk of losing their property as even if it took a year for the RGI company to evict the tenant the landlord would be in recipt of rent and legal costs by vitrue of the RGI policy.

Clearly if a landlord finds he cannot rent at the price he is marketing it for then the laws of supply and demand will kick in and he will have to reduce his prices.

That is the way markets should work.

However house prices won't correct as nobody who doesn't have to will move; just like in the 90's and there WILL be a continuing shortfall of suitable available rental property in the areas desired so that tenants whether they like it or not will have to spend more of their disposable income on rent.

The banks are not going to change things any time soo; they ain't going to lend.

We face a depression if the euro situation is not sorted out.

Unless those hard working Germans decide to subsidise our lifestyles the game is up for the big euro experiment.

Experiments go wrong and this one has big time.

This was all forseen as a massive fraud was perpetrated on counties cooking th books to say they were compliant with euro joining requirements.

Well the chickens have well and truly come home to roots!

High rents will carry on and the thing that will give is people will have to cut back to the bare essentials

Lifestyle will have to go on the backburner.

Efforts will need to be made just to ensure tenants keep a roof ove rtheir head; klet alone any prospect of having a life; forget it for about the next 10 years if you are lucky.

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