Rental costs in private sector 'at record', LSL says
The average rent paid by private tenants
in England and Wales reached a new record high in July, of £725 a month, a
letting group has said.
LSL,
which owns the Your Move and Reeds Rains property chains, said average rents
rose by 1% last month and were 2.9% higher than a year ago.
This
was due to growing numbers unable to get a mortgage, it said.
The
number of homes started by builders in England has also fallen again, to the
lowest level for three years.
Government
figures released on Thursday showed
that only 21,540 new homes were started by builders in the three months to June
this year.
That
was 24% down on the same period a year ago and a 10% drop from the first three
months of the year.
The
Department for Communities and Local Government (DCLG) said: "Starts are now 54%
below their December quarter 2005 peak, but 27% above the trough in the March
quarter of 2009."
'Frustrated first-timers'
The dearth of new housing, allied to the rapidly growing
population and continued rationing of mortgage funds for first-time buyers, has
been a key factor behind the relentless upward trend in the cost of being a
tenant.
LSL
said rents were rising fastest in London and the South East, with the average
rent in the capital now at £1,057 a month.
"The
backlog of frustrated first-time buyers in the private rented sector showed no
sign of clearing in July - in fact, it is still growing," said David Newnes, of
LSL.
"As
lending to those without substantial deposits remains depressed, demand for
rented accommodation can only go one way in the long-term - providing further
upward momentum for rents.
"The
rental market is also entering its summer peak, as recent graduates and those
with new jobs begin to look for new accommodation," he added.
More renters
With
mortgage lenders now typically asking borrowers to put down a 20% or 25%
deposit, many would-be home buyers have been in effect locked out of the
home-buying market.
As a result, many are still being forced to rent a flat or
house when, ideally, they would have bought one in the past few years.
This
has led to constant upward pressure on the demand for rented housing at a time
when house building has been in the doldrums.
Housing
charity Shelter described the rental market as "out of control".
"What
many forget is the devastating impact that every rent rise has on families who
are forced to cut back further on food and other essentials.
"Many
will be wondering how much longer they'll be able to stay in their home."
Figures
earlier this year showed that owner occupation had fallen to 66% of all
households in England, which was back to the level of 1989.
Meanwhile,
the proportion of households renting their homes from private or public-sector
landlords had increased, to 34% of households.
The
effect of all this has been that the level of owner occupation has been dropping
since 2005, after reaching a peak of 70.9% in 2003.
Supply squeeze
Separate
figures have reflected how wages have failed to keep up with the cost of buying
a home in England.
In
2001, the average price of a house was £121,769 and the average salary was
£16,557, according to the National
Housing Federation.
A
decade on, the typical price of a property is 94% higher at £236,518, while
average wages are up 29% to £21,330, the organisation which represents housing
associations in England said.
"Ten
years ago the average amount that you would have needed for a deposit was about
nine months worth of salary. Now you need three years' worth," the federation's
chief executive, David Orr told the BBC.
"All
of these things are indicators of a market where there's not enough supply. And
the simple answer is, we have to build more homes."
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