Friday, 11th July 2014
Rental costs in UK rising, but tenants can afford it, latest index suggests
The latest data from the May 2014 HomeLet Rental Index shows that the average tenant signing a rental agreement in May 2014 had an income 7.2% higher than the average tenant a year previously.
The index, the largest survey of private tenants in the UK, shows that the incomes of tenants taking on new properties have risen faster than rents in nine of the 12 UK regions covered with the average rent in the UK now standing at £846 a month, or £687 a month outside of Greater London.
The effect is that across the UK as a whole, excluding London, rents rose by 2.5% but even with the highly distorting effect of London reinstated in the data, the average rent increase came in only marginally ahead of the average rise in incomes of tenants signing new rental agreements.
According to the index report the figures will reassure buy to let landlords amid some concerns that rent rises would price many would be tenants out of the market as there appears to be a steady supply of new tenants with higher incomes.
The Office for National Statistics says average incomes are currently rising by 1.7% a year in the UK. However, new tenants coming into the market, possibly in the face of higher house prices and tight mortgage finance, have the incomes required to pay higher rents.
‘The rental market is in robust shape. While rents are rising, there is not a shortage of tenants who are able to pay, and the return for investors in rental property looks secure,’ said Martin Totty, chief executive officer of Barbon Insurance, the group that owns HomeLet.
‘This is good news for tenants and landlords alike. We expect demand for rented accommodation to continue to rise, while investors will no doubt be attracted to the returns on offer in the sector if they are confident in tenants’ ability to pay,’ he added.
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