The number of people looking to rent increased by 39% over the past 12 months, as the rental market had to absorb the legions of would-be property buyers who weren’t able to buy because of lack of finance, or were reluctant to buy with property prices on a downward spiral and the prospect of interest rate hikes.
According to Spareroom.co.uk, more people than ever are choosing to rent rather than buy, and the rental sector could be facing a crisis if there continues to be a lack of new rental stock coming onto the market. Spareroom.co.uk figures show that the number of people looking for rooms to rent since the start of the year is 13% higher than for the same period in 2010, and a staggering 61% higher when compared to the same period in 2009.
At the same time, there has been a 15% drop in new rental stock coming onto the market since the start of 2011, again compared to the same period in 2010.There are currently an average of five applicants competing for every available room to rent in the UK, and the average room rent in the UK is currently £351 per month.
The double whammy of a lack of new rental stock coming onto the market at the same time as demand for rental properties intensifies, is putting considerable strain on the rental market. It is also leaving tenants facing significant rent hikes at a time when they are already having to cope with rising fuel and food costs.
Matt Hutchinson, director, Spareroom.co.uk, commented: “The rental market is groaning under the strain of too little stock and too many people looking to rent, and the situation is unlikely to improve any time soon. Inevitably, what is happening in the residential property market has a lot to do with what we’re seeing in the rental sector.
“People who would normally be looking to buy their first property after renting for a few years, and are either unable to because they can’t secure a mortgage, or are reluctant to because of all the uncertainty surrounding interest rates and property prices, are renting for longer as a result. The knock-on effect is that existing rental properties are remaining off the market longer, and with fewer new rental properties becoming available, the supply-demand balance is completely off kilter.
“If that isn’t bad enough, average rents are rising at a rate of knots, by as much as 20-30% in the most sought after areas. This means that for many people who are hoping to save money for a house deposit by renting in the shorter term, they could find that their deposit funds are eroded by having to cover higher monthly rental costs.”