Rent set to reach record highs

Rent costs are expected to rise to record highs in 2013 and increase by 18 per cent over the next five years.

The growth of the rental market, which has been driven by the phenomenon dubbed 'generation rent', shows no signs of stopping as more people turn towards lettings agents and rent properties rather than buy.

Many young adults in particular will rely on renting property, with the majority of first-time renters being in their late 20s and early 30s. A lack of job opportunities, student debt and the rising cost of house deposits are seen as the major factors in causing this trend.

The rise in rental costs will not come as a surprise to many, with a survey conducted by Halifax showing that 66 per cent of people expect rents to rise in 2013. House prices are also predicted to grow, with 38 per cent of people expecting the value of the average property to rise in 2013, compared to 18 per cent who predict a decline.

"Renting can offer individuals stability"

Despite the cost of renting increasing, a letting agency from Sheffield has claimed being trapped in the rental sector does not mean tenants will be losing out to homeowners. Director at Belvoir Sheffield Rick Flay explained how there are plenty of positive elements to renting a property. The expert claimed that although owning a home is traditionally seen as offering financial stability, it may leave people with less security if they are tied to the investment and struggling to pay bills.

"It is a lot harder to sell up and leave than it is to leave if you have been renting and a tenancy has ended," Mr Flay commented.

The specialist noted that outgoings on rented property are mostly fixed, which allows tenants to budget more accurately than a homeowner. For example, if a boiler breaks down landlords have to cover the cost of a repair or new device, while those who own the property have to fund the maintenance themselves.

"New housing fund will stimulate growth in private rental market"

Housing minister Mark Prisk has also announced the launch of a £200 million fund to increase the construction of properties for the private rental sector. The Build to Rent fund will give developers the confidence to build properties specifically matching the requirements of the rental market in that area, knowing that the fund will finance the work until the property is let out to a tenant.

Companies will be offered the chance to invest in the new rental properties and developers will repay the government investment. It is hoped that the new scheme will help to ensure a higher standard of quality across the rental sector and will encourage larger companies to become involved in the market.

Currently, the majority of private landlords are individual investors that have a small portfolio of properties. The government hopes to stimulate the market and encourage large-scale housing organisations to play a key role in the private rental sector.

Mr Prisk said that the fund will "create new jobs, build the homes that families need and local people want, and support economic growth across the country".