Demand for rental property in the UK is outstripping supply, an imbalance that is driving up rates.
The private rented sector in the UK remains highly sought after, as high house prices and a rising cost of living leaves many potential homeowners unable to climb onto the property ladder. Instead, renting has become the long-term option, with "Generation Rent" growing in size.
The recently introduced mortgage restrictions in the UK have only fuelled that interest, as buyer sentiment cooled and sales slowed down. Others who are not cautious in the face of the general election may also be less urgent to purchase property, as moderating house price growth reduces the urgency to move quickly before costs become even more expensive.
This climbing demand has left supply struggling to catch up. Indeed, according to Countrywide plc, the UKâs largest lettings agency, the average UK rent climbed 2 per cent year-on-year in January 2015 to Â£836 per calendar month.
Rents are higher among newly let properties, rising 2.8 per cent to Â£883pcm. Within that sector, one and two-bedroom properties have seen the greatest increase in rent - up 8.5 per cent and 3.6 per cent to Â£751pcm and Â£810pcm respectively. Three-bedroom properties have seen rent climb 1.6 per cent to Â£930pcm, whilst four-bedroom plus properties are seeing a 3 per cent decrease to Â£1,345pcm.
Greater London leads annual growth with a leap of 10.6 per cent to Â£1,265pcm, followed by Wales (6.1 per cent to Â£666pcm) and the South West (4.1 per cent to Â£765pcm).
The only region to see a decrease in rent year-on-year is the South East, down 4.1 per cent to Â£1,035pcm. This is due to a fall in demand for rental accommodation in the South East, as more tenants move out of the private rented sector and into the owner occupier sector.
A similar trend is observed among renewed tenancies, with the South East, Wales and the North of England seeing rents fall 0.5 per cent to Â£1,010pcm, 0.7 per cent to Â£592pcm and 1.2 per cent to Â£599pcm respectivey.
Scotland has recorded the greatest increase - up 5 per cent year-on-year to Â£634pcm - followed by Greater London (up 4.7 per cent) and the Midlands (up 3 per cent).
Commenting on the Index Nick Dunning, Group Commercial Director at Countrywide plc, says: "With a growing population of lifetime renters, increasing the amount of good quality, affordable rental accommodation is needed to meet this demand."
âWith banks making it easier for landlords to offer longer tenancies and with more competitive buy-to-let mortgage products available, now is an ideal time for landlords to expand their portfolios and provide a more diverse range of affordable rental properties throughout the UK, not just in London and the South East as many would expect," he adds.