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Rents on the Rise

Thursday, 12th September 2013

Categories: Lettings Market Analysis

Author: Peter Barry

As more people are forced to wait longer to purchase their first property, the rental market continues to surge, with average monthly rents in the UK now at their highest for two years (according to the Countrywide lettings index). These figures show that the cost of renting a property is still higher in relation to repaying a mortgage on the same property.
This will no doubt cause frustration to those who are desperately saving for a deposit on their first home but for many people in rented accommodation it is par for the course. Across Europe, there is still a tendency for people to remain in rented accommodation rather than buy their own house, whilst in the UK, the general ambition is to see renting a short-term stop-gap on the way to property ownership.

No signs of slowing

With the private rental market swift to reply to the natural flow of supply and demand, it seems there is little to stop rents from increasing even further in the future. The discrepancy between rents and mortgage repayments will, in fact, become even more obvious as mortgage rates continue to fall and purchasers are exposed to ever better deals in the marketplace. However, for many long-term renters in the private sector, the freedom of mobility, and the lack of responsibility for maintenance and faults in the property still outweigh the security of home ownership and they choose to remain in the rental market, whilst their peers struggle to get together the deposit and associated fees required to buy their own property.

It’s horses for courses – but renting certainly isn’t the cheaper option any more when it comes to monthly housing costs. With recently graduated students now seeking employment and an affordable place to live, the hit of rental increases will be felt particularly hard.