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Rental prices hit all time high

Rental prices hit all time high

Category: Mortgages

Updated: 20/05/2011
First Published: 20/05/2011

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 It is now over 6 months old so the content may be out of date.

The strongest April on record in the rental market has taken the cost of renting to its highest ever level.

A spring surge in demand increased the average rental cost in the UK by 0.8% last month, with renters looking at a monthly bill of £692 in return for a roof over their heads.

It means that the cost of renting a home has increased by 4.4% in the last 12 months – the highest annual inflation since November 2010 – and is currently at its highest ever point, figures from LSL Property Services show.

As is the case in the mortgage market, the pace of change is at its strongest in London.

The cost of renting in the capital has soared by 7.9% in the last 12 months, with tenants forking out just shy of £1,000 a month on average.

The second highest rise was evident in the South East, where monthly rents have shot up by 5.7% in the last 12 months.

In fact, only the East of England has seen the cost of renting fall since April 2010, by 0.8% to £709 a month.

"The rental market is heating up as thousands of would-be tenants have taken advantage of the weather and long weekends to hunt for new rental homes," said David Newnes, estate agency managing director of LSL Property Services.

"Even a slightly stronger supply of property has failed to cool rental inflation as landlords take advantage of the growing number of mortgage products available.

"Competition is fierce and tenants are paying a premium to secure properties.

"The average landlord is charging nearly £30 more a month than a year ago, and the rate of increase is unlikely to tail off as lending to first-time buyers remains subdued and demand for rental homes is stronger than ever."

The spike in prices has meant that more than one in ten (11.8%) tenants are in arrears, a significant increase from the previous month.

It is estimated that some £284 million worth of rent went unpaid in April, although this was inflated by the consecutive bank holidays which delayed many payments.

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