Rental demand puts upward pressure on prices
Buy-to-let rents, according to the LSL monthly index of average UK rents have reached a two-year high. The current economic uncertainty has meant prospective buyers are discouraged from buying and are therefore looking to rent.
Furthermore, first-time buyers are finding it difficult to get a foot on the property ladder due to a lack of mortgage availability. Unless they have a sizable deposit, they are typically unable to secure a mortgage.
As a result of increased rental demand, there is upward pressure on prices, according to LSL. The group said that average rents had risen for seven consecutive months, increasing by 1.4 per cent in August.
In some instances higher rents are pushing tenants into arrears, with the south-east experiencing the highest increases where landlords have increased rents by 2.8 per cent.
London also saw a 2 per cent rise during August, with the average rent now standing at almost £1,000 a month. On average, however, monthly rent in the UK is around £686, LSL said.
Commenting on its figures, LSL warn that rents are increasing as more and more potential home buyers opt to rent. People are wary of a further downturn in property prices and concerned over the effect of government cuts on their own ability to meet long-term financial commitments. Additionally, many can not get a mortgage at an affordable rate.