The number of new homes being built across the UK is currently at an all time low. And with more and more people being forced into rental accommodation as they cannot afford the deposit to buy their own house or cannot get approved for a mortgage, rental values are being pushed up and up.
The company that owns Your Move and also the Reed Rains property chain, reported that rents increased by around 1% last month (July 2012) and were nearly 3% higher than they were this time last year.
The average rent for private tenants rose to a whopping £725 a month in July 2012 – this is an all time high.
The rising rents are caused mainly by a lack of new suitable housing. The number of new homes being built across England has fallen to its lowest level in three years, despite various government schemes to kick start the housing market. In the second quarter of 2012 only 21,500 new homes were started to be built by house developers, which is a quarter less than the same period last year.
The population of the UK continues to grow and with continued constraints on mortgage borrowing, a lack of suitable housing and high property prices, there are more and more people that have no choice but to rent. Most under thirties cannot afford to buy their own house unless their parents are able to give them money for the deposit and help them with monthly mortgage repayments.
London and the South East show the largest and fastest rent rises as there is the most difference there between supply and demand. The average rent in London is a huge £1,000 a month!
The government needs to think carefully and plan strategically to enable first time buyers to get on the property ladder. This would then allow those selling small starter homes to upgrade to larger properties and allow the housing market to move forward from its stagnant current position. But with less and less new homes being built and no real incentives to allow the younger generation to buy, prospective home buyers are left with very limited options and renting is one of them.
With rising unemployment and job uncertainty, others are being forced to sell their homes or being foreclosed on and then pushed into rental accommodation.
It has been suggested that around £200 million needs to be pumped into the private sector rental market to meet demand over the next few years and that slowly the UK is turning into a nation of renters, much more like on the continent. It used to be everyone’s dream to own their own home, now that dream cannot become a realty for many.
Worryingly new figures suggest that unless urgent action is taken, there will be around 50% more people claiming housing benefit within 10 years as pensioners no longer have equity in their homes and cannot save for their retirement. This generation will be forced to rent in their old age and without the means to pay the rent will be reliant on housing benefit.