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Tenants despair at record rents

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Tenants despair at record rents

Rents reached a new record high in May after four successive months of rises, according to the latest Buy-to-Let Index from LSL Property Services plc, which owns the UK’s largest lettings agent network.


In May, the average rent in England and Wales rose by 0.5 per cent to £696 per month, surpassing the previous high of £692 in April. The growth means that the average rent is now £30 per month higher than May 2010 – an annual inflation of 4.4 per cent. The average yield remained at a record high of 5.1 per cent in May. 


The figures mask huge differences in regional fortunes. In the past 12 months, rents have risen in all but two regions in England and Wales. Rents have risen the fastest in London, where they increased 7.8 per cent in the past year. The next biggest rises were in the North East, and the East Midlands where rents increased by 6.4 per cent and 6.2 per cent respectively. In the last year, average rents have only fallen in the South West, where they declined by 0.4 per cent, and the East of England, where they have fallen by 1.2 per cent.


Over the last month, rents increased the fastest in the East of England and the North East, rising by 1.4 per cent and 1.1 per cent respectively. Rents only declined in three regions – the West Midlands, where they fell by 0.7 per cent, the South West and Wales, where rents fell by 0.6 per cent and 0.2 per cent respectively.


David Newnes, estate agency managing director of LSL Property Services, said: “Tenant demand has been especially bubbly in recent months. Soaring inflation has taken its toll on would-be buyers’ deposit funds. The rocketing cost of living, combined with ongoing difficulty first time buyers are experiencing in obtaining a mortgage is increasing the number reliant on rental accommodation.


"With the fierce competition for homes, rental gazumping is becoming more commonplace and properties are being let beyond asking price, putting further upwards pressure on the market. For tenants, unable to buy, renting is becoming less affordable as demand booms. Rents are increasing at twice the rate of wages.” 


Paul Jardine, director of Templeton LPA, the specialist surveyors practice,added: “Tenant arrears fell away slightly last month, but the drop cannot disguise the growing financial pressure on tenants’ household budgets. Despite the monthly decline, the total amount of rent late or unpaid in May was still 13% more than the average in 2010. It’s clear that record rents, and the soaring costs of living are taking their toll on many tenants’ ability to pay their landlord on time each month.


"With the full impact of public sector job losses yet to be felt across the UK, and inflation unlikely to plummet any time soon, it is crucial that landlords remain vigilant against payment issues, and resolve any problems early to prevent a tenant from entering severe arrears – and they themselves from falling into mortgage arrears with their lender.”


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