Rents reach a record average £761 a month as house price rises push ownership out of reach and swell demand for lets
By Natalie Wain for Thisismoney.co.uk
Average rents in England and Wales have reached an all-time-high average of £761 per month, an increase of 2.4 per cent year-on-year, new figures reveal.
Data from the UK's largest lettings agents network, Your Move and Reeds Rains, show that rents are now £3 higher than the previous record of £758, reached in October 2013.
Rent in August was up 1.1 per cent on average from July - an increase of £8.
The only way is up: Average rents in England and Wales have reached an all-time-high of £761 on average per month, an increase of 2.4 per cent year-on-year, new figures reveal
In August 2013, average rents stood at £743, representing annual growth increase of £15.
Rents have faced upward pressure as the number of potential housebuyers a has fallen away. House price rises in the past year have pushed home-ownership beyond the reach of many, leading to more demand for rented homes.
The South West saw the biggest gains, with average rent up 3.5 per cent year-on-year, followed by the South East at 3.4 per cent and the North West which registered an increase on 3.3 per cent.
London lagged behind, and was nudged out of the top three with average annual rent rises of 3 per cent. On a monthly basis, rents in the capital were up 1.5 per cent in August from July.
There was little joy for landlords in the North East, however, where rents actually dipped by 1.6 per cent annually, although the region fared better on a monthly basis with rent up by 1.5 per cent one July.
Rents in the West Midland and Wales also experienced annual falls of 0.4 per cent and 0.1 per cent respectively.
Overall, the figures provided a modest boost for landlords, with total annual returns on an average rental property now standing at 12.7 per cent over the twelve months to August, up from 6.4 per cent the previous year.
It represents an increase of 0.6 per cent from July, when returns were 12.1 per cent.
Tenants fared less well, however, with rent arrears up 0.2 per cent compared with August 2013, with the proportion of late rent standing at 8.0 per cent in August 2014, up from 7.3 per cent in July.
This leaves the total amount of unpaid rent across England and Wales at £279million.
Commenting on the results, David Newnes, director of estate agents Reeds Rains and Your Move said: 'No year is the same, and already 2014 has been like no other. The reawakening of mortgage lending startled the property market into a new spring of life earlier in the year.
'The benefits have been felt across the board, not just for first-time buyers but for tenants too. Investment means rents are now only 1 per cent higher in real terms than at the start of 2010.'
He added: 'Meanwhile, the threat of interest rate rises is being held off by economies in the rest of the world marching to a slower tune. Landlords are seizing this cocktail of opportunities. And most critically - when landlords boost profits by adding to the supply of homes, this keeps rent rises lower, and helps pass some of the benefits of these factors onto tenants.'
Designs on renting: Grand Designs presenter Kevin McCloud has urged more Britons to consider being tenants rather than home-owners
Campbell Robb, Shelter’s chief executive, said: 'Our housing market is completely out of control and England’s nine million renters are paying the price.
'Successive governments’ failure to build enough affordable homes and soaring house prices are leaving more and more families with no choice but to live their lives in expensive and unstable rented homes, never certain of what the future holds.
'And sky-high rents mean hopes of escaping the ‘rent trap’ are fading fast for many. We hear from people every day who can barely keep up with their housing costs each month, making saving for a home of their own a mere pipe dream.'
Richard Sexton, director of e.surv chartered surveyors, said: 'The mortgage market may have paused for breath in August, but the recovery is still in full swing.
'However, it is patchy at best. Some areas of the country are operating on fast forward, but other areas are still at a standstill. The capital may be coasting along, yet regions like the North West are still operating in first gear.
'To add another twist to the tale, the very top of the London market is starting to slow. Strong sterling has dissuaded some foreign buyers from investing in high end property, and is putting the brakes on the very top of the market.'
Yesterday, Grand Designs presenter Kevin McCloud urged more Britons to consider being tenants rather than home-owners.
Speaking to The Times, the father-of-two – who lives in an Elizabethan farmhouse near Burton - said the shortage of housing in Britain means it is not affordable for everyone to buy houses and that renting provides a viable solution.
He said: ‘The prices have peaks and then drop, but essentially property in the UK will always be of a premium because there’s not enough of it.
‘So that doesn’t work for a country that is one of the most populated in Europe. There is a tradition of social housing in other countries but we don’t have it.
‘We are going to have to reconsider how we choose to live in terms of renting. There seems to be an allergy to that here and yet renting is a perfectly good idea..'