Average rental values across the UK have risen
in June compared to May, as well as exhibiting a year-on-year increase, new data shows. Figures published in the HomeLet Rental Index
reveal that the average rent in the country now stands at GBP 750 per month, close to its highest-ever level.
While there are regional variations, the only area to experience a fall rather than a rise in the cost of renting was the East Midlands, while the north-west saw the biggest hikes. However, it is still London that is the most expensive place to live from a tenant's point of view, with average rates currently standing at GBP 1,125 per month.
This upward movement in the private rented sector could be good news for any property investors that own real estate in this category. Meanwhile, the HomeLet research also found that there have been changes among the demographics of tenants.
It noted that a greater proportion of renters now earn a higher income, which sales, operations and marketing director Helen Abbott attributed largely to the difficulties facing first-time buyers
looking to get on the property ladder. "We're seeing more tenants in the 26-45 age brackets staying in the PRS [private rented sector] because they're not moving to the sales market as first-time buyers," she explained. In addition, younger tenants are staying at home longer because they cannot afford to enter the rental market, Ms Abbott stated.
According to information published earlier this month by the Department of Communities in its English Housing Survey 2009-10 Household Report, 16 per cent of homes are now in the PRS. What's more, of the new households formed in 2008-09 and 2009-10, two thirds are renting their properties privately.
HomeLet managing director John Boyle believes that rents are likely to climb further over the coming months. "Traditionally, we see the highest volume of new instructions during July, August and September. This means as demand rises over the next few months, we could see further increases in UK rental prices," he commented.
One expert recently suggested that investors are beginning to look at the PRS as a "serious investment class". Chairman and chief executive of Chainbow Roger Southham noted that residential real estate has been the best performing sector from a rental point of view for some time and claimed that this is underpinning the popularity of the Buy to Let market.
- Friday 08 July 2011