Uk Property Rental Prices Enjoy 6th Month Rise

Renting property has become more attractive in the UK with the average cost of letting a home climbing half a percent

. The LSL Property Services reveal in its recent research that the average property rent now stands at 676 a month, higher by 2.3% than in 2009.

This comes as the market experience property availability experience some strain especially in property hotspots like London. But the average housing rent is still 12 a month cheaper than what it was two years ago before the housing boom flooded the markets with properties to let owners could not sell.

One recent news article proclaims that the golden age of ownership in property has basically come to a halt as more people are increasingly renting their homes. The Chartered Institute of Housing (CIH) notes the emergence of social market demographics it calls in-betweens a market too well-off to go into socialized housing but too poor to afford buying a house.

Estate agency managing director David Newnes of LSL Property Services said: Rents are still playing catch-up with the gains house prices made in the last year. The recovery in prices 12 months ago caused an exodus of accidental landlords from the market, ending the glut of supply of rental accommodation. Although house price rises have leveled off, landlords are still reaping the benefits of the constrained supply, and the improving yields have restored a healthier balance to the dynamics of property investment.

With the current slack in residential housing construction projects, property renting is seen as unlikely to give way to property ownership and nether will rent prices decline as the demand is soaring. In fact, if and when interest rates start to climb, landlords are expected to pass the increase to tenant with rent hikes to cover any increase in mortgage costs. But among renters, these increases are often more welcome and affordable than the required deposits and mortgage costs.

First time prospective home buyers in their thousands have been forced to rent over longer periods than they had planned as getting the first stages of owning their homes are getting harder with high deposits and unattractive mortgage rates.

The shortage of housing properties for sale is expected to get more severe before it gets any better. This only means that renting needs to be seen in a better perspective as a viable option for housing. Its time to throw out the old adage that when it comes to housing, its better to buy than to rent.

The emergence of in-between demographics has become the trend and they often belong in the annual income group between 12,000 to 25,000 who remain financially challenged to meet the requirements for home property mortgage. While house prices remain well below their 2007 peak, industry observers still consider the housing market as overpriced in the context of long-term payments, earning capability and home values.

LSL also revealed that for a typical landlord investing in rental properties, he can make an average return of 3.5% a year or around 5,838. It adds that with housing prices remaining stagnant, much of the gains are coming from rental incomes.

With a sensible investment, as astute landlord can expect healthy returns while any future capital appreciation can be seen as bonus.

by: Simon Drew

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