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The Price of Renting Continues to Rise

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The average price of renting a home in England and Wales is now over £700 per month with annual rent inflation now standing at 4.1%.  That makes the average cost of renting £28 per month higher than twelve months ago, as a shortage of new homes and difficulties for many in getting a mortgage, fuels the demand for rental properties.  In London, the data is even more pronounced, with average monthly rents being £1,000 - and they’re currently rising at 6.9% annually.As far as the rental market is concerned, supply is currently being well outstripped by demand.  The numbers of those who chose to rent are being swelled by those who have no choice but to rent – and even the ranks of those who chose to rent are being boosted by those who fear another property downturn.  Consequently, landlords in many areas of the country can be confident of raising their prices and still being able to find a tenant.Government figures show that the number of people who own their own homes has been falling since 2005.  At that time, 14.8 million houses (71%) were owner-occupied, where as in 2010, this figure had dropped to 14.5 million (67%).  Despite house prices having fallen by 12% since their 2007 peak (Land Registry figures), lender’s demands for big deposits continues to put home ownership out of reach for many first-time buyers.As a consequence of this, the number of private renters has increased significantly; a further 1 million more households since 2005, bringing the total to 3.4 million.  This figure is now almost on par with those living in social housing.  Over two-thirds (68%) of new households formed between 2008 and 2010 were living in the privately rented sector.David Newnes is the estate agency managing director of the letting agency, LSL Property Services.  Commenting on the current market conditions he said: “We’ve had five successive months of rent rises, but there is no sign of a let-up anytime soon.  Despite several new deals on the market, securing a big enough mortgage remains a tall order for the average buyer.  The climbing cost of living and renting is impacting how much renters can save for their deposit, and demand will remain high in the short-term.”

Average rent in June 2011