Property slump fuels growth in rented housing

THOUSANDS of householders, unable to sell but desperate to move, are fuelling the first growth in private rented housing since the First World War.

Residential lettings have been the one sector of the property market to expand in the past two years, with people reluctant to buy as prices fall, and vendors having no incentive to sell.

It is estimated that more than 100,000 new homes came on to the letting market last year. Lettings agents have reported a 20 per cent rise in managed properties, while the number of private homes on short-term lease to local authorities has risen by 30 per cent.

All the large building societies have seen an increase in the number of borrowers asking for permission to let their homes. Abbey National believes the growth in approved lettings has been more than 10 per cent.

Hard-pressed individuals are not the only ones renting out their homes. Property developers are releasing blocks of unsold flats to rent as an alternative to accepting low prices for sale.

Deregulation of rents in the 1988 Housing Act and the growth of shorthold tenancies has also encouraged more landlords to let more property.

But the rise in the number of good quality flats and houses has had an impact on rents. Average prices are falling in London and the South-east, the centre of the property recession, and are static elsewhere. Large numbers of owners are finding it difficult to get enough rent to cover their mortgage payments.

The average mortgage taken out in the boom years was more than pounds 60,000, so homeowners looking to rent need at least pounds 150 a week. Such rental levels are rare for smaller properties outside London and initial purchase prices in the capital were higher.

Although the recession has increased the attractiveness of renting it has also meant a decline in job mobility, one of the generators of demand for rented housing. Private rented accommodation accounts for only about 7 per cent of total households, compared with more than 90 per cent before 1914 and about 25 per cent today in France.

Most letting agents predict that the numbers will continue to increase in line with the rising supply of properties.

Piers Parbury, director of Doorknob, residential agents in Covent Garden, central London, said supply was outstripping demand. 'Two or three years ago if we advertised in the Evening Standard people would be knocking our door down. Now we would get two or three telephone calls.'

The surplus has led many small landlords and individuals to turn to local authorities to take on their homes.

Private sector leasing, as it called, has nearly doubled in the past 18 months to more than 20,500 units in London alone, according to the Bed and Breakfast Information Exchange.

The London Borough of Hackney has taken on 3,800 private properties on leases of up to three years which are used to house homeless families. Even at rentals of up to pounds 200 a week, the charges are less than for inferior accommodation in a bed and breakfast hotel at pounds 40.60 a night.

Estate agents report that a new generation is wary of buying property after seeing friends and colleagues get their fingers burnt in the boom of the 1980s. Edward Tyler, chairman of the Property Bureau chain of letting agents, believes the smart new figures are those that rent. 'We have had people who have sold their homes a few years ago and have gone into the rented sector. They must be laughing.'

----------------------------------------------------------------- REGIONAL RENT LEVELS ----------------------------------------------------------------- Furnished property pounds per week Two-bed flat Three-bed house Region Scotland/N England 71 87 Midlands/E Anglia 92 107 SW England 93 119 SE England 111 162 Greater London 175 243 Inner London 214 308 Prime Central London 314 492 NATIONAL AVERAGE 152 217 ----------------------------------------------------------------- Source: Association of Residential Letting Agents. -----------------------------------------------------------------

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Sales Manager

£35000 - £45000 per annum: Recruitment Genius: This is a unique opportunity to...

Recruitment Genius: Trainee Manager - Production

Negotiable: Recruitment Genius: Trainee Managers are required to join the UK's...

Recruitment Genius: Telesales Manager

£25000 - £35000 per annum: Recruitment Genius: You will maximise the effective...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + uncapped commission : SThree: Hello! I know most ...

Day In a Page

The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

The saffron censorship that governs India

Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
Prince Charles' 'black spider' letters to be published 'within weeks'

Prince Charles' 'black spider' letters to be published 'within weeks'

Supreme Court rules Dominic Grieve's ministerial veto was invalid
Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

How did fandom get so dark?

Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
The galaxy collisions that shed light on unseen parallel Universe

The cosmic collisions that have shed light on unseen parallel Universe

Dark matter study gives scientists insight into mystery of space
The Swedes are adding a gender-neutral pronoun to their dictionary

Swedes introduce gender-neutral pronoun

Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

Disney's mega money-making formula

'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

Lobster has gone mainstream

Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
Easter 2015: 14 best decorations

14 best Easter decorations

Get into the Easter spirit with our pick of accessories, ornaments and tableware
Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

Paul Scholes column

Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

The future of GM

The greenhouses where Monsanto 'plays God' with the future of the planet
Britain's mild winters could be numbered: why global warming is leaving UK chillier

Britain's mild winters could be numbered

Gulf Stream is slowing down faster than ever, scientists say
Government gives £250,000 to Independent appeal

Government gives £250,000 to Independent appeal

Donation brings total raised by Homeless Veterans campaign to at least £1.25m
Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

The most borrowed book at Bank of England library? Oh dear

The book's fifth edition is used for Edexcel exams
Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

Cowslips vs honeysuckle

It's the hunt for UK’s favourite wildflower
Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

Did a botched blackmail attempt help Cyril Smith escape justice?

A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss