The latest Rental Index from Homelet indicates that the cost of the average residential property rent in the South West of the UK increased by 6.78% in September compared to August. This is the largest month on month increase for any region in the UK during 2010.

Heidi Abbott, Sales, Marketing and Operations Director, said:“The latest index reiterates the fact that the sustained demand for rented property over the summer period has continued to out pace the supply of available rental properties in the UK. This demand has pushed up rental values, particularity in the South.

“Recent figures have shown that constraints in the UK sales market have pushed the average age of first time buyers to 43. An increasing number of people are now looking at renting as a longer term option, either through choice or because of a lack of available funds for a deposit.

“There’s no doubt that the importance of the private rented sector has increased significantly over the last decade, it’s now a key element of the UK’s fragile housing supply chain, but the lack of available properties to rent is a real concern. The market has recently seen an increase in the availability of buy-to-let mortgages, but these remain expensive for investors with less than 20% equity. The increase in Capital Gains Tax has also proved to be a barrier for potential investors and the ongoing supply constraints will continue to support increasing rents in the near future.”

When comparing September 2009 against September 2010, the data from Homelet showed that rents have risen in all regions of the UK except for the North East, which has seen a small decrease in rents of just 0.94%.

Abbott continued: “We’ve found that many letting agents across the UK are now struggling to find enough landlords to meet the demand from their potential tenants.”