According to the buy-to let index that was published by LSL Property Services the average cost for tenants who want to rent a home in England and Wales is increasing. It is happening quicker than the rate of inflation which is due to the huge demand for rental properties as “generation rent” are emerging.
The report states that the average rent is now £737 per month which is 0.1 per cent higher than in April. It is predicted that by the end of 2015 the average rental price for a property will be £800 but there will be regional differences of course.
Since May last year the average rental price in London is now £1,113 per month which is a huge 7.2 per cent increase. This was closely followed by Wales where prices have increased by 5.2 per cent since May 2012. The third area that had the fastest rate of rental increase is the north east which is 4 per cent higher than last year. These increases vastly outpace the cost of living increase which grew by 2.7 per cent in May.
As mentioned, the reason for the high rental prices is that it is becoming less and less affordable for those who want to be first time buyers to join the property ladder as saving a deposit is difficult with stagnant wages. The amount of new tenants increased by 3.4 percent between April and May and year on year this figure has increased by 5.1 per cent.
It was reported that in May the total amount of rent that was either late or unpaid was £276 million which is less than the figure in April. LSL say that the reason for this is that tenants are getting their finances in a better order to reduce debt and give them a better chance of saving for a deposit. Even though tenants are getting their money on track, as a landlord it is essential that you can pay the mortgage each month. The best way of doing this is to check if your landlord insurance policy includes rent arrears. If not you can always take out rent guarantee insurance.
David Newnes is the director at LSL Property Services and he has said, “With wage growth so weak compared to inflation and house price growth, it looks like deposits will become less affordable – which will keep demand for rented accommodation high.
“The rental market has demonstrated its flexibility in May, but will need to continue to adapt to deal with the long term change towards levels of demand unprecedented in recent decades. May’s figures are consistent with our longer term predictions – that private renting will become a more and more vital aspect of the economy.”
