Rents rising at half inflation rate
Rents have risen by just £5 over 12 months, currently standing at £741 per month.
Since January 2010 rents have increased by 12.9%, less than the 14.5% inflation recorded over the same period.
This is a new trend, as before 2010 there were 33 months of inflation rising higher than rents compared to 19 the other way around.
David Brown, commercial director of LSL Property Services, said: “Not only are rents rising more slowly than inflation, but the cost of private renting is also rising in line with household incomes.
“Even before the economic weather changed so recently, the last few years have seen rent rises dwarfed by inflation most of the time. Meanwhile the private rented sector has absorbed millions of households while other tenures have been unable to take up the slack.”
Promisingly for tenants their financial situation has improved, as tenant arrears now represent 7.4% of rent compared to 8.4% last year.
Brown added: “Things are getting better, and this is apparent in the rental market.
“The cost of living challenge will be with us for some time. Yet it will be overcome by supporting the industries that supply vital services and by conquering the real culprit – stagnant wages.”
He warned against proposed reforms to the rental sector, such as a ban on tenant fees.
He said: “Rents would be higher. When tenant fees were banned in Scotland rents rose 4% in the space of six months.
“This is ten times the rate of rent rises in England and Wales over the same six month period, where such a ban had not been introduced. Before this they were mostly flat.
“Furthermore, if tenants have no advance financial commitment then there is nothing to stop them pursuing multiple tenancies at the same time and just taking the first one that completes, dropping the others.”
He explained that a ban could also unfairly punish landlords.
He said: “Finally, it should be remembered how not all landlords are ‘fat-cat investors’.
“Many only have one property used as their pension. Others are ‘accidental landlords’ and rely on the rent to pay their mortgage.
“If tenants drop out at the last moment, this could mean hardship.”