Private rents expected to rise
Average private rents in Britain are expected to rise by two to three per cent this year, according to figures released by property analysts Hometrack.
The figures come two months after a report by Inside Housing contradicted claims by the government that rents had been falling as a result of rule changes to the Local Housing Allowance.
Hometrack’s findings show that the rental market in London is distinct from the rest of the country - with rents in the capital often twice as much as comparable properties elsewhere.
Rents in London increased by 9.6 per cent in 2011, while rents in all other regions remained at the same level they were three to four years ago.
This is due to London’s status as a world city and its large financial sector, meaning a lot of demand in the housing market comes from abroad, contrasted with other regions in the country, which are driven largely by domestic demand.
The rise in rents in Britain has been matched by an increase in investment, with buy to let lending rising by 32 per cent in 2011.
Richard Donnell, director of research at Hometrack, said: ‘The rise in private rents has been driven by growing tenant demand and a shortage of supply. With no major improvements in mortgage availability likely in the near future rental demand is set to remain strong. There is however a limit as to how high rents can go as affordability constraints continue to squeeze household budgets.’