The average cost of renting a home in the UK increased by 1.8% during July 2013 to £826pm according to the HomeLet Rental Index.
It is also a rise of 3.6% on July 2012 and the second consecutive month that the average rental cost has reached a new record high.
Andy Richards, HomeLet’s Business Development Director, said: “July has been a record month for the rental market with half of the UK’s regions seeing record-high rental amounts – and the overall UK average again reaching a new all-time-high.
“These record numbers are from regions across the whole of the UK, which suggests demand for rented homes is at its highest no matter which region people live in. However, Greater London remains almost 90% more expensive than the rest of the UK, with tenants in the Capital now paying an average of £1,297 per month to live in a rented home.”
Average rents in Greater London saw an increase of 2.1% on both a monthly and annual basis to reach £1,297pm, the highest on record, the previous high was in September 2012. However when the Greater London figure is removed, the average cost of renting a home in the UK is £695 per month making it 86.4% more expensive to rent a home in the Capital than the rest of the UK.
Richards said: “The London Rental Standard that was launched at the end of July aims to improve (accommodation) standards within the Capital’s private rented sector – however, it doesn’t include the stabilisation of rents. Therefore the question that springs to mind is when and how does the increase in the cost of renting a home begin to ease?
“The average amount a tenant earns increased by 1.3% during the past month to £28,500, which is also 2.5% up from the same time last year. Average rents increased by 1.8% and 3.6% during the same time periods though, suggesting tenants are paying the price for the increase in demand.”
Tenants in the North East are paying less rent on average than anywhere else in the UK, at £564 per month, with average rents in Greater London currently 130% more expensive than in the North East.
The percentage of tenants aged 18-21 moving into a new rented property has decreased on an annual basis twice in consecutive years, with a fall of 2.4% between July 2011-12 and 1.7% between July 2012-13.
Richards commented: “Regulation of the private rented sector and lettings agents’ fees have once again been widely reported recently - resulting in the Office of Fair Trading requiring lettings agents to show their charges to tenants in all adverts. When combining this with the Government’s decision earlier this year requiring all lettings agents to belong to an Ombudsman scheme, the signs suggest the industry is set to see a number of changes.
“However, regulation and additional administration could lead to even steeper rises in monthly costs if fees are passed to tenants through an increase in rents. Yes, rents are going to increase along with inflation – but it appears tenants may have to pay the price for new regulation, which ironically is supposed to make things better for them. Tenants already seem to be facing increasingly expensive rental prices due to the lack of mortgage availability, so I hope the new Help to Buy scheme helps to ease the pressure on the industry that’s essentially hitting our tenants’ pockets.”
