Rental boom: record rise in new tenants could push rents up

Rents could soar this year thanks to a record high number of new private tenants and a serious shortage of properties, research revealed today.

More than 275,000 new tenants registered for private rental accommodation last year, a 24% increase on 2010, according to UK letting agent Countrywide. August, meanwhile, saw the highest number of enquiries since Countrywide records began in 2004.

With a 35% increase in enquiries, London unsurprisingly saw the biggest spike in new tenants, followed by the North and Scotland, both with a 22% rise, and the South with a 21% rise. 

The increase in demand has resulted in many rental properties being let before they are even advertised.

Properties that do make it onto the market, meanwhile, take an average of just 13.5 days to be let, 1.3 days less than in 2010. In London it takes just 12.2 days to let a property.

The report’s findings also show that while couples under the age of 35 continue to make up the largest proportion of new tenants, there are a growing number of families entering the private rental market – a trend most evident in the North and South East, Countrywide said.

Nick Dunning, Countrywide’s commercial director, said: ‘We are in the midst of a rental boom as renting has become the new norm.’

‘With a record number of tenants entering the private rental sector, there is a vast shortage of properties available in all areas of UK, which could potentially fuel a steady rise in rent prices throughout 2012,’ he said.

'Aspiring first-time buyers are renting for longer as they are still finding it almost impossible to get a foothold on the property ladder, with deposit funds being eroded by the high cost of living and banks still cautious about lending at high loan-to-value ratios,' Matt Hutchinson, director of flat share website SpareRoom.co.uk, explained.

'With renters staying in properties for longer, there is a lack of old stock coming back on to the market, which is affecting the supply-demand balance,' he added.

New figures from the Council of Mortgage Lenders (CML), meanwhile, shows that while the buy-to-let sector is a long way off the boom period seen in 2007, it is clearly recovering from its low point in 2009. 

The number of properties being bought with buy-to-let mortgages increased by around 84,000 in 2011, CML said, which 'modestly helped' to increase the supply of private rented housing in the UK.