UK home rental costs hit record high

For anyone looking to find affordable rented accommodation in the private sector, the latest news will be unwelcome: average home rental costs hit a record high in April according to LSL Property Services, the UK’s biggest letting agency network.

Across the country, the average tenant was paying £692 per month in April, a 4.4% (or £30) increase on the average rate twelve months before.

LSL ascribed the rise to increasing demand, as those trying to get onto the property ladder are spending longer living in rented accommodation while they save up the money needed for a deposit to buy somewhere else.

This is despite the fact that the number of rental properties available on the market has actually increased during the same period.

According to David Newnes, the estate agency manager of LSL, “Competition is fierce and tenants are paying a premium to secure properties. The rate of increase is unlikely to tail off as lending to first-time buyers remains subdued and demand for rental homes is stronger than ever.”

Uneven geographical spread

However, this overall trend masks an uneven geographical distribution of rises and falls. Unsurprisingly, London is the area that has seen the biggest rise in average rents, with properties in the city now 7.9% higher than they were a year ago. The South East recorded the second highest gain with 5.7%.

On the other hand, some regions actually saw declines in average rental rates over the year, with the East of England falling by 0.8%.

The month of April itself also saw uneven changes from the month before, with average rents falling by 0.7% in the North East and 0.1% in the South East and Midlands, while the South West rose by 1.7%.

The increased rates may have led to an interesting sociological change in parts of Britain, as more couples look to share with other people in order to split the higher cost. Some 90% more couples are now looking to share a flat with other people than was the case in May 2010, according to property website easyroomate.co.uk.

As might be expected given that rents are increasing in most places while the economy remains fairly stagnant, the number of tenants in arrears to their landlords has also shot upwards. A full 11% of all household property rent was apparently unpaid at the end of April, amounting to around £284 million. This is 27% more than was the case in March, although the bank holidays in April will have had some impact as they caused people to delay their payments.

The impacts on self storage

Increasing property rents are a good thing for self storage in several ways.

Firstly, rents are rising quite quickly, which affects the price tenants have to pay from the first day they move in; by contrast, self storage typically gives customers an easy start with generous introductory offers cushioning them for the first couple of months, before regular increases slowly raise the rate they have to pay.

The cost of self storage normally rises much more slowly than the cost of renting property, so it becomes more economical for people to put things they don’t need all the time in self storage and rent a smaller dwelling instead. This is borne out particularly in London and the South East, where accommodation rental costs have risen most quickly.

If the average property now costs £692 per month in rent then this compares quite favorably with self storage, where 100 square foot would typically be £2500 in total for the first year, or £208 per month.

Secondly, in tandem with the difficulty of getting onto the property ladder, the high cost of renting is leading more and more young people to opt to live at home for longer.

This is likely to create more custom for the self storage industry, as the young people and their parents often don’t have enough room under one roof for all their possessions, forcing the overspill into self storage.

Thirdly, the increasing number of young people choosing to live together in order to split the high rental charges is likely to create business for self storage companies, as they may not have enough room for all their possessions if space is tight.

2 Responses to “UK home rental costs hit record high”

1. manosonia20 says:

   May 29, 2011 at 3:21 pm

   Great Article

   Now UK home rental going costly its not good for us because we can’t pay more money for rental for our vacation.

2. HPL Properties says:

   July 19, 2011 at 3:09 pm

   This is due to i think, the buying market having things higher prices or possibly the recession, so people are waiting till they find the right place