So far in 2014, tenants aged 30 and under have accounted for 42% of new tenancies signed, down from 52% 12 months ago.
There are signs that a degree of pent up demand in the sales market has now been released, said Countrywide, fuelled by the shortage of new-build housing, particularly in London, the South East and other major conurbations.
According to Countrywide’s residential lettings database of over 65,000 rental properties, average UK monthly rents increased 4.6% over the past 12 months, growing at approximately twice the rate of 2013.
Unlike 2013, when rents grew most quickly across parts of Northern England, it has been Outer London and the East of England where rental growth has been fastest. These are the two regions which together which have accounted for 40% of all employment creation over the last 12 months.
Rents in London continue to be driven by the Capital’s booming population which government figures show increased by 108,000 to 8.4million in 2013.
Low interest rates offered by savings accounts, typically an average of 1.17%, continue to make the total returns associated with buy to let investment attractive against other investment vehicles, said Countrywide.
Nick Dunning, group commercial director, Countrywide, said: “Over the medium to longer term a lack of supply will increasingly put landlords in a stronger position to ask for, and achieve, higher rents.”
He added: “Significant upward pressure on rents will come from a lack of house building, particularly in London, the South East and other major conurbations with sound fundamentals experiencing population growth. Equally, any move by the Bank of England to raise interest rates will serve to push up mortgage costs, making it harder for those with smaller deposits, in particular, to get on the housing ladder. The single best way to alleviate upward pressure on rents is to build more affordable new homes, both for rental and for sale.”
