Rents Going Up!

HomeLet is the UK’s largest supplier of tenant referencing to the lettings industry. The August 2012 issue of HomeLet Rental Index had some interesting points that we thought were worth highlighting and bringing to our clients attention.

Rents around the UK have increased to the highest price ever seen – Ian Fraser, HomeLet’s Managing Director, had this to say.

“With the average cost of renting a house in the UK increasing by 2.1% over the past year to £806 a month, tenants are paying more rent than ever, and we can see demand for rental homes in many areas remains high. This is beneficial for landlords and letting agents – however, for tenants they really are being stretched more than ever – which provokes the question of how long are tenants going to be able to afford these continually rising living costs?

Data from this month’s report shows less of the tenants we referenced were previously homeowners, and an increased percentage of them previously rented another home. This could be further proof that renting has become a way of life for many. The August report also reveals the average ago of the UK tenant has consecutively decreased over the past three years to 32. This is contrary to the average ago of a first time buyer that has increased to 37 (source: The Office of National Statistics (ONS)).

Combining all this information reinforces how a higher amount of people are turning to the private rented sector when moving to a new home. In addition, people appear to be staying in rented homes for longer as they cannot afford the high moving costs and mortgage fees. People’s difficulty in purchasing a house, along with the resulting increase in demand for the private rented sector, has pushed up rental prices and led to a shortage in rental stock.

It’s not surprising the Government has announced a housing crisis and pledged to invest in buy-to-let properties. However, this will be a long-term process and in the meantime it will be very interesting to see how soaring rents and diminishing supply will impact tenants before these changes take effect”.

The August 2012 report also looked at the North/South divide, focusing on the North East v Greater London. The figures they provided show:

• That after three consecutive annual decreases in rent – this time by 3.3% - the North East remains the most affordable UK region to rent a home, at £524 a month.
• Apart from a marginal dip of 0.2% in May 2012, the South East is the only region to have seen average rents consecutively increase since January.
•  East Anglia saw the largest annual increase in rents after the average cost rose by 8.8% to £763 a month since August 2011.

[Information provided by HomeLet]