Private rental costs reach historically high levels, according to LSL Property Services
The monthly housing expenses for individuals and familiesí currently renting accommodation in the private rental sector has risen to a historic high of £761, according to recent figures released by LSL Property Services.
The data was released by the reputable lettings network which identified that September was a particularly hot month in the private rent sector as prospective tenants clamour to find new living places to occupy.
LSL said that the cost of renting property in England and Wales during the year to August 2014 increased by 2.4%, representing a £3 rise from the previous all-time record of average monthly rent costs of £758, registered in October of last year.
LSLís research also looked into the impact that buy-let practice has had on the property market over the last 12 months, with their data compellingly suggesting that many investors of this kind actually made more from their property endeavours in the past year than from their main employment.
According to their data, buy-let investors had profiteered from the rise in capital and rental cost growth, concluding that the average investor had attained returns of almost 13% in the last year. And whilst this might be good news for those who have enough capital to afford forage into the property market, the same cannot be said for those in the private rental, with fresh questions arising about how the current generation of young workers will be able to acquire affordable housing to live in as the market continues to become more expensive.
Rents were also up 1.1% in August compared to the month before, with the LSLís scope fairly broad within their study, looking into the movement in costs of 20,000 properties across the country.
David Newnes, director of Your Move and Reeds Rains, said: “Autumn is when more people move to take up new opportunities, to build new careers and to start new chapters.”
The areas which were affected the worse by price hikes in rental costs were the South West and South East of England, which displayed a 3.5% rise in average monthly rental costs to £651 a month and £3.4% rise to £788 respectively.
This trend also somewhat worryingly continued in London as well, where average monthly rents were up by 3% to £1,160 ñ an alarming reality considering the lack of attainability that most young workers have when it comes to buying a house in the hugely inflated property market in the capital.
Campbell Robb, chief executive of charity Shelter, maligned the government for failing to adopt a long-term strategy to the countryís housing shortages at the start of the 00ís, arguing that the failure of ësuccessiveí governments to address the supply and demand ratio across the UK had meant that a plethora of houses now had to live in financial uncertainty within the rental sector.
He said: “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.”
Housing Minister Brandon Lewis said the LSL study was an “inaccurate reflection of the private rented sector” because it only looked at new contracts. He said official figures showed rents had fallen every year in real terms under the current government.
Buy-let; profit heaven?
Market analysts have argued that the steep rise in property prices combined with the ever-soaring costs of renting had elevated the profitability of buying-let immensely over the last few years.
LSLís research illustrated that landlordís in the UK have enjoyed a rise of 12.7% on average on their return on investments in the last year, taking their estimated returns up to £8,233 in rental payments and £13,066 in capital gains prior to taking other factors such as secured loan repayments, tax and other expenses into consideration.
Landlords have also been able to attain a buy-let mortgage for far cheaper than they have done in the past over the last 12 months, though questions have been raised about the long-term profitability of the procedure, considering that interest rates rises are on the horizon and thus the housing costs landlordís will have to pay will be far higher than they have been in the last five years.
This could be a potentially harmful for the financial security of those in the private rent sector as landlordís raise the costs of renting in the future when their current fixed rate deals expire and they are forced to pay more themselves on their mortgages and transfer the costs onto their tenants.
Alex Hilton, director of pressure group Generation Rent, said it was “mathematically impossibleî for landlordís to retain their level of profits they are enjoying at present and somewhat ominously forecasted that ëwithout a calming intervention this will crash heavily,”.
Tenant missed payments rise
The effects of rising rent costs seem to already have emerged in reality as LSLís research also highlighted that the number of people in arrears with their payments rose to 8% this August ñ amounting to a staggering £279 million in late and missed payments ñ up from the 7.3% figure in July.
David Newnes, director of LSL, said:”Property investment means rents are now only 1pc higher in real terms than at the start of 2010,” he said.
“Furthermore, landlords have benefited from higher property prices, which is helping portfolios to expand and more homeî.