December 14, 2010 11:15 ET

Monthly Rental Rates on the Increase

LONDON, UNITED KINGDOM--(Marketwire - Dec. 14, 2010) - According to LSL Property Services, the average monthly rent in the UK has increased by 3.1% to £689. This figure, the highest the UK has ever seen, is due to the increasing demand for rental accommodation faced by landlords.

According to David Newnes, Estate Managing Director of LSL Property Services, this increase is driven by the high demand for housing. Its primary cause has been due to the exorbitant costs of houses across the UK, which has turned the buy-to-let market into a landlord's market.

"Landlords have seen tenant demand continue to hit new heights. The mortgage market remains tight and many buyers simply cannot get the finance to get a foot on the property ladder. With potential spending cuts on the horizon and uncertainty over the direction of the economy, many buyers are choosing to remain in rented accommodation for longer – perhaps to wait for house prices to fall. As a result, demand for rental accommodation is increasing and supply is not rising fast enough to match it," said Newnes.

These increases have also been attributed to government spending cuts. Andrew Stanford, Head of Cluttons' residential consultancy division, believes that the government's plans to develop 150,000 new homes between now and 2014/5 will not be enough to fulfil the amount of new accommodation actually needed in the UK.

"It is, therefore, apparent that there will continue to be a strong reliance on the private sector for the delivery of new homes to meet the projected need of 240,000 new homes per annum to keep up with household formation. However, development funding for residential schemes is substantially more limited than has been the case over the last decade. It is, therefore, very unlikely that the overall delivery of new homes will reach the average for the recent past, let alone the stated need," Stanford declared.

In the meantime it seems that landlords are benefiting from the boom in the rental sector. In order to minimise the risks included, it is vital that they acquire Endsleigh landlords insurance for peace of mind when renting out their property.

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