London leads the way as rent rises are predicted to continue
Increased tenant demand and low levels of rental properties coming into the market means rental prices are set to rise further, surveyors have predicted.
It is more bad news for tenants, who have already seen a 40% increase in rents across the UK since January 2010.
The survey, carried out but the Royal Institute of Chartered Surveyors, (Rics) reports rents increased in every region of the UK in the three month to April.
The most notable increases were seen in London and the South East, where rent prices continue to accelerate at a greater pace than in other regions.
Rics finds 42% more chartered surveyors saw rents rise than surveyors who recorded a fall.
Rics put the rush down to higher demand for rental properties thanks to a combination of high deposits required by mortgage lenders and the unaffordability of available mortgage finance. These mean that home ownership remains out of reach for many would-be buyers.
The influx of tenants into the rental market is another factor in pushing up prices. Some 35% of surveyors reported a rise in renters, with the biggest increases being seen in the Midlands and Wales.
A 'distinct change' in London
Rent rises reported in London highlighted the continued regional disparity between the City rental market and the rest of the country.
Rents in buy-to-let hotspots have risen so sharply that previously affordable rental homes are now unattainable to many, as an increasing number of tenants are priced out of the market.
London-based surveyor Edward Reeve says tenants who occupied flats for up to 3 years now have to move out as they can no longer afford the rent. Reeve comments: 'The writing is on the wall! This is a distinct change from three months ago.'
Mark Wilson from Globe Apartments puts high rents in the City down to 'wealthy parents who send their children to London to study and employees of multinationals with sufficient disposable income to pay higher rents.'
Supply and demand
Surveyors noted how the lack of available rental property in London has caused prices to rocket. 'The lack of stock continues to dog us', says one surveyor.
Even outside urban areas the rental market is limited. Surveyor Peter Dack comments on the situation in Hampshire: 'There are a lot of one and two bed flats at the moment, which we're finding difficult to let. But we have a shortage of two and three bed houses, which get snapped up quickly.'
Those in rental accommodation are staying longer, limiting the choice for new tenants. Estate agent JD Wood and Co said that 78% of tenants had renewed their properties for the coming year. This is up from a running average of 63% over the last 5 years.
'There has been a small uplift in supply, but the imbalance between demand and availability can only mean rents will continue to rise', commented Rics spokesman James Scott-Lee.
When will prices peak?
The findings by Rics come after a separate survey by LSL Property Services found rental prices in England and Wales reached an all-time high in March, with an annual rise of 4.2%.
LSL reports that 68% of landlords expect tenant demand to grow in the next 12 months.
The picture is positive for landlords, who are enjoying increasing tenant demand after 185,600 fewer first-time buyers entered the property market in the last 12 months, compared to pre-2008 levels.
This means prices are unlikely to have peaked, and are on course to rise throughout the year.