Rents soared to a new high last month, with “fierce competition” from frustrated would-be home buyers continuing as the market enters its summer peak, a study shows.
The typical rent in England and Wales rose by 1% to £725 in July, surpassing a previous high of £720 per calendar month recorded in October last year, lettings network LSL Property Services - which owns chains such as Your Move and Reeds Rains - found.
This meant that the pace of annual rental inflation has also increased, climbing to 2.9% from 2.4% in June.
Rents are rising at their fastest on an annual basis in London, climbing by 4.8% to also reach a new high of £1,057.
The private rental sector has seen a surge in demand as people have struggled to get on the property ladder, because they cannot raise a hefty enough deposit or meet lenders’ tightened borrowing criteria. Several mortgage lenders have stepped up competition recently by cutting some of their rates, but much of this has been aimed at less “risky” people with larger amounts of equity.
Borrowers with smaller deposits are expected to have a tougher time taking out a deal amid the uncertain economy.
Rents rose across England and Wales for the fourth month in a row in July and have hit new highs in London for three months.
David Newnes, director of LSL Property Services, said: “The backlog of frustrated first-time buyers in the private rented sector showed no sign of clearing in July - in fact, it is still growing.
“As lending to those without substantial deposits remains depressed, demand for rented accommodation can only go one way in the long-term - providing further upwards momentum for rents. The rental market is also entering its summer peak, as recent graduates and those with new jobs begin to look for new accommodation. With more tenants on the move, alongside long-term underlying demand, fierce competition for properties is enabling landlords to increase rental prices to new highs.” On a monthly basis, rents in the South East climbed the fastest, increasing by 2.2% to reach £746.
Rents fell on an annual basis in two regions, decreasing by 1.2% in the South West.