Private sector rents reach record high of £789 a month

Private sector rents across England and Wales hit an all-time high of £789 a month on average, according to a buy-to-let index.

The figures from estate agents Your Move and Reeds Rains showed rents jumped by 5.6% in June compared with a year earlier, making it the fastest annual increase since the index was compiled in 2009.

Rents grew by 1.4% month-on-month between May and June according to the study, which is based on rents achieved on around 20,000 properties across England and Wales.

The report said the rise in rents came last month, despite official figures earlier this week from the Office for National Statistics showing that inflation slipped back to zero in June, from 0.1% a month before.

It said these moves underscore a new trend since the beginning of the year that has seen rents rise out of line with inflation.

The survey added this is the first month since July 2013 that rents have risen more quickly than house prices for comparable properties, with the annual rate of house price growth standing at 4.5% over the 12 months to the end of June.

Adrian Gill, director of Your Move and Reeds Rains, said: "The pedal is pressed to the metal in the rental market. Not only have rents hit a new all-time record high – but we have never seen them rise so quickly."
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He added: "Growing wage packets and a strengthening economy mean that a greater number of tenants are able to afford higher rents. With such an overall shortage of housing in the UK, rental costs are primarily driven by the amount tenants are capable of paying."

Mr Gill said moves by Chancellor George Osborne in last week's Summer Budget to cap the amount landlords can claim on mortgage interest payments may see them pass on these costs to tenants as further rent rises.

Rents in London also stood at a record £1,241 in June, after climbing by 2.8% last month. But in the South West, rents fell by 1.3% over the same period to reach £658 on average.

Rent arrears lifted to 8.7% of all rent payable in June, from 7.6% of all rents in May, and 7.8% compared with a year ago.

But Mr Gill said: "While any uptick in the proportion of rent in arrears is a step down the wrong path, this should be seen in context.

"The overriding trend is still towards lower proportions of rent in arrears – far lower than was seen during the financial crisis."