Soaring rents in London are leading to some fundamental changes in tenancies, according to the latest rental report from specialist landlord insurer Homelet.
Average rents in London hit £1,156 a month in March – while tenant incomes dropped around 3.5%.
To cope, says Homelet, more tenants are laying off the cost of renting by sharing, while tenants claiming housing benefits are starting to move away from the most expensive areas as the government cuts the money they receive.
Overall, UK rents rose by 2.6% to £764 a month as tenant incomes fell by 1.2% outside the capital.
“Tenant incomes appear to be rising at a much lower rate than they were 12 months ago. As economic uncertainly continues it’s likely that incomes could remain flat for many tenants in 2012, especially those with public sector jobs,” said managing director Ian Fraser.
“With inflation remaining high and average tenant incomes not growing at a proportional rate to rents, tenants budgets will continue to be stretched.
“Traditionally rents rise in the run up to September, when more high yield student properties go on to the market.
“The level of affordability for rental property varies for each region of the UK. While sharing property, particularly in the capital, helps to ease the financial pressures that tenants are facing, it’s important to remember that tenants across the country are getting varying sizes and standards of property for their money.
“To ensure long term growth after the economy has recovered, the private rented sector has to offer value for money, and while demand is high, it’s important that the quality of rental stock does not deteriorate.”
Regionally, rents dropped a little in the North East, North West and Wales, but continued to rise elsewhere.
London rents were up 6.1% on the month, while the south east also climbed 5.1%. The best returns elsewhere were 3.5% in the South West.