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Continuing rise in rents ‘inevitable’

Continuing rise in rents ‘inevitable’

Category: Mortgages

Updated: 31/08/2011
First Published: 31/08/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Demand from new tenants desperate for a rented home has continued apace, with future rises in monthly costs being described as 'inevitable'.

Rents continued to increase in the three months to July, with 34% more surveyors reporting a rise in rents rather than a fall during the period.

Significantly, the imbalance between demand and supply is thought likely to persist with the survey results suggesting that further gains in rents are likely over the coming months.

The trend of costly and sparse rents continues to be driven by would-be buyers moving to the lettings market after struggling to find lenders prepared to give them a mortgage, or first time buyers remain frozen out because of deposit demands.

Meanwhile, the tough economic climate has seen more tenants relying on help from the Government.

Social lettings are now at their highest level since 1999, at 13% of all new lets, up from 8%.

Additionally, lettings to private renters continue to make up the majority of lettings, at 66%.

"The combination of strong tenant demand and a limited stock of good quality properties on offer is pushing rents ever higher across much of the country," said James Scott-Lee, spokesperson for RICS.

"This is the case both for houses and flats. Moreover, with mortgage finance for first time buyers likely to remain in short supply for some time to come, this imbalance is set to persist. The inevitable outcome is that rents will continue to increase."

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