July saw private rents rise to an average of £705 per month across England and Wales. In a survey from LSL Property Services, a company of letting agents, it was revealed the rising cost of rents, at an increase of 0.6% last month. The last six months have seen steady increases, with today’s rents £29 per month more than last year.
London saw an even higher rate, at 7.1% higher than 2010, reflecting a higher average of £1,009 per month. David Newman, of LSL, attributed the higher costs to the difficulty faced by prospective first-time buyers in purchasing homes. “Rents are on an upward trajectory, and it is unlikely that tenants will gain respite any time soon,” he said.
“Demand from thousands of frustrated buyers each month is underpinning buoyant competition for rental homes, enabling landlords to increase prices.”
In addition, parents with adult children have had to help provide a deposit for those wishing to rent a new home. With deposits in London costing over £1,000 on average, it has not been uncommon to find parents supplying the income for the deposit.
Jonathan Moore, from the website Easyroomate also attributed the costs to the difficulty of finding deposits for purchased homes, saying, “First-time buyers cannot get mortgages, so demand for rented homes soars.
“Rents shoot up, tenants find it even harder to save a deposit to buy, and rental demand strengthens further.”
In Scotland, rental prices have also gone up, with an average for private rent at £663 per month revealed for the second quarter of 2011. The website Citylets, an online rental company, released a report showing the highest level of average monthly private rental prices since the third quarter of 2008. It was also attributed to higher demand driven up by frustrated potential buyers, struggling to buy a home.
The cycle is likely to continue, with the forecast for house prices in the UK increasing. According to the Centre for Economics and Business Research (CEBR), the average price of a home was expected to fall in 2011 and rise quickly over the next few years. Prices are estimated to rise by 2.4% in 2012, and 4% in 2015. This is thought to be due to the potential shortage of new homes to be built over this time.