The cost of being a tenant increased for the second consecutive month during March as demand for rental property continued to outstrip supply, research indicated today.
The average rent being charged by landlords in England and Wales increased by 0.4% during the month to £687, according to lettings agent network LSL Property Services.
The latest rise left rents 4.2% above where they were a year ago, and at their highest level since November 2010, when they reached a peak before dipping during the traditionally quiet festive season.
The cost of renting a property is being pushed up by strong demand, as the high deposits being demanded by lenders are forcing would-be buyers to rent for longer than they would previously have done.
But the problems in the mortgage market are also preventing many landlords from expanding their property portfolios to meet the rise in tenants, leading to a mismatch between supply and demand.
David Newnes, estate agency managing director of LSL Property Services, said: "Landlords are seeing demand for their properties go from strength to strength.
"Although more high loan to value products are coming onto the market, there is still not much money at that level, and first-time buyers simply can't afford the average £25,000 deposit lenders require without substantial aid from parents.
"The growing demand continues to outstrip supply, and this is pushing rents upwards beyond the rate of inflation and well above wage rises."
The group said if rents continued to rise at their current pace, it would cost an average of £715 to rent a home in a year's time, while the amount charged in London could break through the £1,000 barrier to stand at £1,050 a month.
But there continues to be strong regional variations, with landlords increasing rents in six regions of England and Wales during March, but reducing them in four.
The East of England saw the strongest rent hikes at 2.2%, followed by the South East at 1.7%, while rents in London have soared by 7.3% during the past year.
But at the other end of the spectrum, landlords slashed the amount they charged by 1.6% in the South West, leaving rents 2.4% lower than a year ago, and by 1.3% in the West Midlands. The cost of being a tenant in Wales is also 1.5% cheaper than it was 12 months earlier.
Tenants' finances improved during March, with the proportion of rent that was paid late or not at all falling to 9.4% down from 12.6% in February.
An estimated £224 million of rent was unpaid during the month, the lowest level since October last year.Reuse content