Renting costs rise with drop in property stocks

The cost of renting a home is continuing to rise as the surplus of properties available to let dwindles, research showed today.

Average rents rose by 0.7% in April to £826 a month, nearly 1% higher than they were a year earlier, according to FindaProperty.com.

The group said it was the first time it had seen a year-on-year rise in rents since January 2009, with rents climbing by an average of 2.7% since the start of the year.

The improvement is being driven by a fall in the number of properties available to let, with stock levels dropping by 9% during the month, to be a third lower than when they peaked in May 2009.

The group said the level of rental properties had fallen steadily since the beginning of the year.

The decrease is likely to have been driven by a fall in so-called reluctant landlords, people who were forced to rent out their homes after being unable to sell them during the housing market downturn.

The group said with less surplus stock and rising rents, there was now more balance between landlords and tenants, limiting the scope for either party to dictate the terms of a tenancy.

Nigel Lewis, property analyst at FindaProperty.com, said: "The start of 2010 has been a strong period for the rental market.

"While there have been dips and jumps over the first four months the general trend for the UK has been asking rents rising steadily.

"But the future of the rental market depends completely on how the sales market reacts when the coalition Government has had time to bed down."

The supply of houses that were available to rent fell by nearly 10% in April to their lowest level since July 2008.

Average rents on houses have jumped from £829 per month in January to £846 a month in April following a 22% drop in stock levels.

The supply of rental flats is also 13% lower than it was at the beginning of the year, helping to boost average rents to £767 a month, the highest level since February last year.

Average rents are now higher than they were at the beginning of the year in all regions of Great Britain apart from Wales.