How much more will rents rise?

Pretty much all over the country this year, rents in the private sector have been rising.

The average rent now paid across the UK has topped £700.

Bearing is mind this is the average for the UK as a whole, in London the average rent is an eye watering £1000

Because mortgages are now so difficult to come by, and lenders are demanding higher deposits for their home loans, many people are being forced into renting for longer periods, before they can become first time buyers. This has been significantly called ‘Generation Rent’ and has created a considerably greater demand for rental properties.

With economic concerns being worldwide at this time, there does not appear anytime soon that banks will be more willing to lend to first time buyers.

So begs the question. Just how far can rents go higher?

Well even for the professional tenants with high salaried positions, it is beginning to prove difficult, some are failing to meet referencing demands. The number of tenants failing credit and referencing checks has grown considerable. Now one in five fail, whilst in 2007 only one in twenty did not qualify.

The vast majority of referencing agencies require income levels to be between 2.5 – 3 times the monthly rent level. Any bank or savings deposits are not taken into consideration.

In more cases tenants are now offering to either provide a guarantor or are paying additional deposits or rent in advance. As the country looks as prosperity measures, with everyday bills for food, fuel and utilities continue to rise, tenants will opt for cheaper rental properties, or revert back to sharing.

As Sensible and pro-active letting agents, needless to say, we encourage every landlord to maximise the gain they get from a rental property but look at the whole picture not just rent levels. Avoiding rent voids and keeping good tenants in place for longer periods are often more profitable strategies than a rent increase.