The average charge for renting a property from a private landlord across England and Wales went up 0.7% in June to £701 per month. These figures have been reported by LSL Property Services who own letting agencies around the country.
The letting firm has indicated that there is currently a strong demand for rented properties and that this demand has been driving prices up. They have also indicated that there is no sign of a let-up in demand from tenants; this is the fifth successive month of rent increases.
The figures for the past year have shown that on average, rent charges in England and Wales have increased by 4.1% or the equivalent of £28 per month. The highest rental charges are in London where the charges have gone up by an average of 6.9% in the past year. The average rent in London is now £1,006 per month.
David Newnes of LSL Property Services indicated that whilst tenant demand is continuing to grow, there isn’t enough new rental property coming onto the market to meet it. He added: “In areas like London where competition for rental property is most intense, it’s not unheard of for rental properties to be let within a day of coming on to the market.”
In 2008 and 2009, rent charges had been showing an average decrease in price. However, as the economy began to recover, they started to rise strongly again.
The Association of Residential Letting Agents (ARLA) have confirmed that the number of people who are looking for rental accommodation is increasing. They also confirmed that 74% of their members had more prospective tenants on their books than they had property available to let.
LSL Property Services believe that there are two factors contributing to the increase in demand for rental accommodation. They believe that a lack of new build properties is forcing many potential home buyers to turn to the rental market. Only 103,000 new homes were built over the past year – at the same time, the UK’s population has been growing at a rapid rate. They also believe that a large proportion of first-time buyers are unable to raise the deposit required to be
eligible for a mortgage, and many more are finding it difficult to raise the amount needed.
On a more positive note, LSL Property Services also indicated that tenants’ arrears have fallen to 9.3% of all rents due, a reduction of 2.2% from 11.5%. The LSL Property Services calculations suggest that this now amounts to an approximate total £257 million in rent arrears across the UK.
However, Mr Newnes believes that this improvement in rent arrears has been driven by a change in the behaviour of many landlords. H indicated that in light of the increasing rental charges, many landlords are being less forbearing with any tenant who shows signs of payment
difficulties. The expectation of higher rental income is encouraging them to replace these problem tenants with more reliable, and profitable, clients.
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