Landlords have continued to see rents rise in the residential lettings market in some parts of the UK while at the same time tenant arrears have been following a downward trend. Across the whole of England and Wales the average rent has also been rising in the private rentals sector. Tenants have been experiencing rents at record highs in many UK regions, including the South East, the East of England, the North West and Yorkshire & the Humber, but most notably in London where they have been hitting new peaks.
On a monthly basis, rents have been rising in eight English regions in total. The South East (excluding London) saw rents climb the fastest as it continues to be difficult for first time buyers to secure a mortgage despite the government programmes, such as Funding for Lending and Help To Buy, which were designed to solve the problem of mortgages only being available to those with large deposits. The lending criteria imposed on many potential buyers has caused the market to stagnate in many parts of the country.
However, in certain regions, such as Wales and the West Midlands, month-on-month rents have been observed to decrease and on an annual basis rents also fell in two regions, decreasing by 1.9% in the South West, and by 1.8% in Wales.
The rental market is right in the thick of its peak season in late summer and early autumn, and the demand from graduates and those starting new jobs has added a new layer of competition for the best properties on top of the existing group of frustrated buyers who cannot obtain an adequate mortgage. The stringent mortgage finance criteria and large deposit requirements imposed by the mainstream banks and building societies for potential buyers continue to increase the pressure for additional rental properties.There is the possibility of this situation easing over time as the Funding for Lending and Help To Buy schemes introduced by the government begin to filter through and result in increased lending to borrowers with small deposits.
The government schemes designed to help first time buyers get on the property ladder in the UK will need to be significant and sustained over a long period of time before the current demand for rental property eases and rents return to more affordable levels.
Whether you are a first time buyer looking for a relatively modest mortgage or are an existing home owner looking for a million pound mortgage to upgrade from you existing home, everyone is hoping for an improvement in the situation where monthly rental costs are at least the same as the cost of a mortgage but it is simply the lack of a large deposit preventing people from being able to secure a mortgage and buy a property. As the Help To Buy scheme is now opening up new mortgage deals from banks such as RBS to those with only a 5% deposit and specialist mortgage brokers are increasingly securing funding from non-traditional lenders, it appears that the state of the property market may be set to improve.