The HomeLet Rental Index for September has recorded a drop in average monthly rents across the UK, although the researchers noted that the amount tenants pay is still 4.5 per cent higher than a year ago. Regions such as East Anglia, Wales, the West Midlands and the North East recorded the biggest month-on-month declines, while the South West, Scotland and Northern Ireland saw the greatest rises.
According to the organisation, there has been an increase in the number of tenants in the under 35 age bracket moving into the private rented sector (PRS) after having previously lived with relatives. Managing director of HomeLet John Boyle explained that restrictions on mortgage lending coupled with the high deposits required to make a property purchase may mean that younger people are being priced out of homeownership and forced into the PRS.
He noted that these issues are particularly acute in London, where a rising number of people who have previously owned a property or lived with family are moving into private rented accommodation. "Despite rents increasing at a high rate, movement into the capital is still being facilitated by the PRS. Those who may have bought in the past are looking to renting as a more viable option," Mr Boyle commented.
Meanwhile, the most recent HomeTrack national housing survey indicated that the number of people hoping to buy a property is falling, while more homes are entering the market, creating a widening gap between demand and supply. As a result, director of research at the organisation Richard Donnell, predicted downward price movement on residential real estate over the coming months.
Affordability is a key issue within the housing market and an increasing number of people may look to the PRS if they are unable to get a foot on the property ladder. The HomeLet data also revealed that average tenant incomes dropped from August to September by 0.96 per cent, which could put additional strain on household budgets and see tenants renting for longer. Indeed, the research found that the average length of a rental contract has crept up since January this year and now stands at around one year and eight months.