The recent crisis about the cost of living reached a new chapter today with an announcement made about the average cost for rent rising all over the UK.
According to data from estate agent giants LSL, the average monthly rent in England and Wales has risen to £757, which represents a 2.1% increase from the year before.
This follows an almost 2% increase in rental costs in August, which was up from the year before, and is producing a worrying pattern for home renters across the UK.
The study also indicated that 8.5% of rent charges were paid late in September, which represented a 0.7% increase from the month before.
The statistics will undoubtedly be utilised by government critics, who have recently cited the growing cost of living as a real problem for people across the UK.
The current rate of inflation has been determined to be 2.7%, which is higher than the annual increase in the cost of rent.
Supply and Demand
The data follows statistics from mortgage providers which indicated that the number of applications and loans dispensed increased again in the month of September.
LSL have accounted for the increase in rental costs by pointing to the increase in demand by consumers across the UK.
They outlined that people were still finding it hard to buy property if they were first time buyers and as such the demand for rented properties was as high as ever.
“Higher rents in almost every region show that, despite government schemes, buying a first home is still a difficult aspiration,” said David Newnes, director of LSL, which owns estate agents Reeds Rains and Your Move.
“This is not only down to low salary growth, but also a general shortage of supply – which is the underlying reason why homes are getting more expensive. The long-term trend to renting therefore looks unlikely to change significantly in the near future.”
LSL’s announcement follows a period of prosperity in the property market, thought to have been brought about by the government’s implementation of the second phase of its Help to Buy scheme. Under this part of the initiative, consumers would be helped to get on the property ladder by reducing the amount they have to pay on the deposit to 5% of the property’s value.
They have also tried to make it easier for people to acquire a mortgage by agreeing to guarantee 15% of their secured loan, in return for mortgage providers approving more applications. Furthermore, they have looked to help people deal with rising house costs by introducing 95% loan to value mortgages that will cover the cost of their desired property.
However, critics of the scheme have warned that it will lead to an artificial inflation in house prices and an eventual ‘housing bubble’.
Statistics produced by the Council of Mortgage Lenders have indicated that the gross amount of money distributed on mortgages had decreased by 0.2 billion from August to September, but this still represented an increase of almost £5 billion from the year before.