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Rental market booms to counter high house prices

Monday, 24 September 2007 12:00 AM

The value of the UK rental market has seen a dramatic increase during September, research released today finds.

Letting renewals saw a 40 per cent increase in value on the figures recorded for August, according to estate agent Hamptons International.

"September is one of the busiest times of the year in the lettings market," commented Kate Whotton, regional lettings director at Hamptons.

"However, with current market conditions this has been exacerbated.

"We have seen a 17 per cent rise in the number of applicants and approximately a ten per cent rise in the number of lettings instructions and strong rental renewals.

"The lettings market becomes more robust if the sales market suffers and this is certainly the case at the moment."

Hamptons lay responsibility for the trend with turmoil in the international financial markets, making it harder to secure credit for mortgage lending.

Uncertainty over the future direction of interest rates has created further concerns for those looking to buy property.

Demand for rented accommodation has also been prompted by higher house prices.

First-time buyers now have to pay an average of seven times their income to secure their first step on the housing ladder, making it unaffordable for some.

However, there has been a fall in the number of tenancies being renewed.

As many as seven per cent fewer contracts were renewed in September, compared with August. Annually the fall was 14 per cent.

"The drop in the number of tenancies renewing is down as landlords take advantage of rental increases.

"Rather than renewing a tenancy at a smaller increase they put the property back on the market to obtain a much higher rental," concluded Ms Whotton.

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