8 Jul

Rental costs on the rise

Rental costs on the rise

The cost of renting in the UK is increasing, according to new figures.

Data from the May HomeLet Rental Index shows that although prices are rising, many tenants are still able to afford the increases.

People signing rental agreements in May had an income that was 7.2 per cent higher than at the same point in 2013.

The figures are the largest survey of private tenants and show that the income of renters has increased faster than rents in nine of the 12 UK regions involved in the research.

Overall, the average rent in the UK is now £846 per month or £687 per month if London is excluded.

The only areas where incomes did not increase above rent rises were Yorkshire and Humber, Northern Ireland and Greater London.

Across the UK, not including London, rents rose by 2.5 per cent. The largest increase in rental prices was seen in East Anglia - largely thought to be because of the demand from those looking for areas that are commutable from London but more affordable.

The capital saw rents rise by an average of £116 during May - bringing the average monthly rent in the city to £1,348.

"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.

He added: "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."

Meanwhile, a landlord in Kent has managed to secure £30 million of funding to build 900 homes to meet the strong demand for property in the region.

Orbit Homes has reached a deal with the Royal Bank of Scotland to ensure financial backing is available for the multi-million pound project - which will include a number of affordable homes.

Paul High, executive director of Orbit Homes, explained the support of the bank will play a key role in tackling the nationwide shortage of housing and the company hopes to meet targets for new homes by 2020.

Adrian Warby, senior relationship director at the Royal Bank of Scotland, added: "We are proud to support Orbit Homes through this exciting period of development, creating much-needed housing for local people."

The latest figures from the Nationwide Building Society show that UK house prices increased by one per cent in June and were 11.8 per cent higher than in June 2013 as demand continues to push up values across the country.

This means the average price for a UK home is £188,903 and prices have risen for 14 months in a row.

In the capital, prices were up by almost 26 per cent in the second three months of the year compared to the same period last year and the average price is now over £400,000ADNFCR-1222-ID-801734085-ADNFCR

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