The National Housing Federation is predicting that average rental rates in the East Midlands region will rise by 53%, taking the average monthly rent payment to £784 by 2020 while average rents across England as a whole are predicted to rise by only 47%. The NHF predictions are based on a range of economic indicators such as the retail price index.

“Construction has stalled over the past five years since the beginning of the economic downturn and we are now seeing the impact of this on rental prices,” said Jill Griffiths, Lettings Partner at Andrew Granger & Co. “With fewer new homes being built, the region is in urgent need of more affordable housing. The rental market is also experiencing increasing demand as potential first time buyers are deterred by market conditions and high mortgage deposits.”

The NHF, which represents housing associations, believes that the issue could be resolved by releasing more brownfield sites for development and identified a former velodrome in Leicester as an example of a prime site for social housing. An application from Leicester Housing Association has recently been approved to build 45 homes as part of the first phase of development on the site with the support of a £1.8 million grant from the governments Homes and Communities Agency.

“With the average private rent in Leicestershire and Rutland currently £511 a month, these predictions of record rises will inevitably be bad news for renters. Inevitably, it largely comes down to the laws of supply and demand: if there aren’t enough houses for the region, prices and rents will escalate which is making it a good time for would-be landlords to take the plunge and enter the market.”

The NHF estimates that around 22,000 new homes will need to be built across the East Midlands to meet demand. However, less than 9,000 new homes were built in the region in 2011.

Katherine Brabner, of the National Housing Federation, said: "Rents are rocketing up and wages are simply not keeping up with those increases. Demand has also increased: the average age of the first time buyer is now aged 35.”