Spiralling rents hit new record high

Rents rise 7.8% in London, followed by north-east and east Midlands as tenants are unable to get a mortgage to buy Tenants suffered again in May 2011 as the average rent in England and Wales hit a new record high of £695, a 0.5% rise on April, fuelling increasing incidents of “rental gazumping”, according to the latest LSL Property Services buy-to-let index. During the month, rents increased the fastest in the east of England (1.4%) and the north-east (1.1%), and declined in only three regions: the West Midlands (-0.7%), the south-west (-0.6%) and Wales (-0.2%). This takes the annual rise in rent to 4.4% – below the headline rate of inflation in the UK. Annually, rents rose the fastest in London, increasing by 7.8% during the last 12 months, followed by the north-east and the east Midlands, where rents increased by a respective 6.4% and 6.2%. During the last year, average rents only fell in the south-west and the east of England, where they declined by 0.4% and 1.2%. For landlords, the total annual return across England and Wales remained steady at 2.9%, based on average rent of £4,891-£7,414 against a decline in property values of £2,523. The total annual return in London dwarfed the national average, rising to 9.5% or £22,339 per property. If property values continue on their current trend, LSL said a property investor could expect to make a total annual return of 5.7% over the next year – equivalent to £9,404 per property. Despite the rises, tenant arrears fell in May 2011, with 11.5% of all rent in England and Wales unpaid or late by the end of the month, compared to 11.8% by the end of April. But this figure is well above the 10.6% average of 2010, and takes the total unpaid rent to £277m. David Newnes of LSL Property Services, which owns the UK’s largest lettings agent network, including national chain Your Move, said: “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.” Newnes warned that with tenant finances coming under increasing strain from rampant inflation and soaring rents, as well as public sector squeezes, it is “critical that landlords notice and react quickly to any potential payment problems to prevent tenant arrears spiralling out of control”. Renting property Property First-time buyers Consumer affairs Mark King guardian.co.uk

Posted by on June 17, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.