Cost of new tenancies continue to rise

Cost of new tenancies continue to rise

The latest data from HomeLet has shown that the average rental agreement outside the capital during the three months to February 2016 cost 4.8% more than in the same period last year.

While that rate of appreciation was down on the 5.5% seen over the three months to January, rents on new tenancies continue to rise much more quickly than inflation in most parts of the country.
 
HomeLet’s research also shows that as rents have risen in recent years, the number of new tenancies signed by a single tenant has fallen. Last year, single tenants accounted for just 33% of new tenancies on rental properties, down from 67% in 2008. By contrast, the proportion of new tenancies signed by two tenants rose from 28% to 52% over the same period. New tenancies signed by three or more tenants have risen from 5% to 15% of the market.
 
This trend may in part reflect the increasing number of families moving into the private rental sector as house prices have become less affordable and as people have pursued greater flexibility. The latest data from the Office for National Statistics reveals the number of privately rented homes let to families with dependent children has risen from 30% to 37% over the past 10 years.
 
The increasing number of tenants per property may also suggest people are more inclined to rent together after a sustained period in which rents have risen more quickly than general inflation: HomeLet’s data shows the proportion of new tenancies taken on by three tenants rose from 3% in 2008 to 8% by last year. Homes with four or more tenants accounted for 7% of the market last year, up from 2% in 2008.


The higher rents recorded by the HomeLet Rental Index mean the average rent on new tenancies signed during the three months to February 2016 was £1,521 per month in the capital - and £744 per month across the rest of the UK.
 
Rent rises in the London market are once again increasing, though remain below the double-digit increases seen last year: the average rent agreed on a tenancy in Greater London over the three months to February was 7.7% higher than 12 months ago, up from annual growth of 6.2% during the previous three-month period.
 
The Index shows rents on new tenancies rose in 10 out of 12 regions in the UK on an annual basis over the three months to February 2016. The exceptions were the North West of England, where rents dipped by 3.2% from £657 per month last year to £636 per month, and the North East of England, where rents now stand at £519 per month, 2.6% lower than a year ago.
 
Martin Totty, Barbon Insurance Group’s Chief Executive Officer, said: “We’re continuing to see the effect of the imbalance between demand and supply in the private rental market: average rents are still rising and while we are not seeing the double-digit increases recorded in some areas of the country during the summer of last year, the cost of a new tenancy continues to rise more quickly than general inflation.
 
Our data on the number of tenants in each property gives a fascinating insight into the changing nature of the private rental market. Landlords are letting out homes to many more families, with rental property representing an increasingly important alternative to owner occupation; we’re also seeing people manage with higher rents by meeting the costs as joint tenants.”

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Latest Comments

AbbieP.
AbbieP. 22 Jul 2016

"While house prices in the most expensive eleven boroughs have declined values in the cheapest eleven boroughs continue to rise" - not a nice way to even out the price range. London is overrated as it

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AbbieP.
AbbieP. 21 Jul 2016

And try to profit from your decisions, I may add

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CommercialTrust
CommercialTrust 19 Jul 2016

Retirement investment has always been one of the biggest draws of buy to let. And the buy-to-let demographic is, on balance, older. (Over a third of our applicants are over 50 at the time of application.) It...

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Forrest Wheatey
Forrest Wheatey 11 Jul 2016

I find the time perfect for ever home-owner wannabe. Prices should slowly, but steadily drop, at least for the inner buyer. Making it harder for outsiders to buy properties (the whole Brexit thing means...

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property guru
property guru 11 Jul 2016

Why should Ajay even have to be looking for it. It should be public knowledge. Why is not just publish each years and to were it is and be AUDITED. Accountability.

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property guru
property guru 11 Jul 2016

Surprise suprise

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CommercialTrust
CommercialTrust 30 Jun 2016

This is great news for buyers and investors in a period of significant uncertainty. The 10-year buy-to-let fix at 3.99% in particular is excellent, a clear 100 bps ahead of the nearest competition. Though...

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Lee
Lee 30 Jun 2016

Let's see what happens to north-east property prices when Nissan announce they're leaving.

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DmitriKara
DmitriKara 29 Jun 2016

I just read another article about eviction rising and this was exactly what was on my mind, Housing has become "cat and mouse"...

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DmitriKara
DmitriKara 29 Jun 2016

I am really not surprised. I've seen one too many impudent tenants and in my humble opinion renters have one too many privileges and options to abuse heir landlord in so many ways...

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DmitriKara
DmitriKara 29 Jun 2016

There is still so much uncertainty and I will surely step back and see what's happening before I could make any decisions on my end.

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ChristinaReedUK
ChristinaReedUK 20 Jun 2016

I don't understand why it's always a war between the two sides. Either, way the landlord is probably keeping a detailed inventory and will see the changes you've made. I just don't understand why there...

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