Private rents hit record high
Private sector rents jumped to a new record high of £778 a month on average in May across England and Wales, according to a buy-to-let index.
A lack of choice of rental properties and improving household incomes meaning that some tenants are finding they can afford to pay more are driving rents upwards, according to the report from estate agents Your Move and Reeds Rains.
The push-up in rents is particularly sharp in the East of England, which has seen a 13% surge in average rents over the last year - marking the largest annual rise seen in any region since records started in 2008 - the report said.
The average monthly rent in the East of England stood at £819 in May. In London, the average monthly rent was £1,207, following a 7.4% year-on-year increase.
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Adrian Gill, director of Your Move and Reeds Rains, said: "In absolute terms, London rents are a world away even from the home counties.
"But the East of England, led by exceptional economic expansion in the Cambridge area, is seeing even faster rent rises."
The previous all-time high for rents across England and Wales had been set just one month earlier than the new record, in April, when the average monthly rent was £774. Rents in May were 4.5% higher than they were a year earlier.
Speaking generally about the factors behind the rent increases, Mr Gill said: "Household incomes are now finally heading upwards, at least for the majority, so a good number of tenants can afford to pay more. That is starting to remove what had been the main factor holding back market rents.
"More fundamentally and over the longer term, the cost of a home comes down to a severely restricted stock of housing. The economy has maintained a decent upwards trajectory for a while, but more people in employment and more people earning better wages hasn't yet been matched by any comparable growth in the number of available homes."
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Not all regions saw an increase in rents year-on-year in May. Rents in Wales fell by 2.8% year-on-year, to reach £556 on average. In the East Midlands, rents fell annually by 0.8%, taking them to £571 typically. In the North East of England, rents edged down by 0.4% year-on-year, taking them to £511 on average.
In other areas, rents increased at a more modest pace annually, recording growth of 1.4% in the South West, 1.6% in Yorkshire and the Humber and 0.9% in the West Midlands and the North West of England. In the South East, rents increased by 3.6% year-on-year.
Tenants' finances also deteriorated in May, with 7.7% of all rent in arrears, up from 7.0% in April.
Mr Gill continued: "On the whole, tenants are able to afford the latest rent rises. In fact the latest acceleration of rents in line with faster wage growth isn't a coincidence - a good number of tenants now have more ability to compete on price when securing a new rented property.
"But inevitably there are still many other households who haven't seen their incomes rise rapidly and may begin to start new tenancies at higher rents this summer.
"A more buoyant labour market is good news for tenants and landlords, but it may also put the shortage of stock in the housing market into sharper perspective."
The report is based on rents achieved on around 20,000 properties.
