Rent costs rise to record high
Tenants' finances are becoming healthier despite the cost of renting lifting to another record high in October , a major lettings network has reported.
Average private-sector rents across England and Wales increased to £770 last month, edging up on a previous all-time peak of £768 recorded in September, according to LSL Property Services, which owns chains Your Move and Reeds Rains.
But LSL, which began monitoring rental prices in 2008, said that tenants' finances are close to the best level it has ever seen and could be set to improve further in the coming months.
Some 6.9% of all rent was in arrears last month, which is the second smallest percentage recorded by LSL.
A record low of 6.6% of rents being late or unpaid was recorded in November last year and rent arrears have been as high as 14.6% in February 2010.
David Newnes, director of Your Move and Reeds Rains, said that despite rents reaching a new record high, the pace of rent increases is slowing, which is helping to ease the pressure on tenants' finances.
Rents are 1.5% higher than they were a year ago, which is slightly higher than the Consumer Price Index (CPI) rate of inflation at 1.3%.
But in October last year, rents had risen at a faster rate of 1.9% year-on-year and in October 2012 rents had increased by 3.4% over the previous 12 months.
Mr Newnes continued: "Tenants have battled a broadly stagnant jobs market for years.
"Recent progress on the unemployment rate has helped bring down the most serious cases of rent arrears.
"But for others consistently falling just a little behind on rent, the trouble is more with incomes that just haven't kept pace with the cost of living."
He added: "Looking ahead, if more homes to rent can coincide with a true renewal of real wages, this could provide a powerful combination and would take rent arrears even lower."
The North East of England is the only region across the country where rents are lower than a year ago. Rents in the area have dipped by 0.5% annually to reach £520 a month on average.
Of the regions which have seen annual rental growth, London has seen the slowest, with a 0.5% uplift over the last year.
But at £1,162 on average, rents in London are about one and-a-half times the size of rents across the country generally.
The East of England has seen the largest jump in rents over the last year, at 4.9%, followed by an annual rise of 3.6% in the East Midlands and a 3.1% year-on-year increase in the North West.
In Wales, rents have increased by 1.6% over the last year to reach £573 a month typically.
The findings came as a separate report from property analyst Hometrack said that property values in all of the UK's 20 largest cities have surged by at least 5% over the last year, meaning that those looking to make the jump out of renting and onto the property ladder could face having to stretch their finances harder to do so.
Hometrack said its findings mark the first time that all 20 cities have recorded annual property price growth above 5% since November 2004, although it is also seeing signs that the pace of house price increases is starting to cool down.
Mr Newnes said that landlords have benefited from the "spurt of rapid house price growth".
He added: "As price rises steady a little, landlords can rely on newly stable rental yields.
"Stable yields aren't only good news for landlords. Letting a property now involves even less risk of not getting the rent on time and tenant arrears could reach a new record low in the coming months.
"That should boost demand from tenants and investment from landlords. Good news on the affordability of renting is good news for the whole country."
Housing Minister Brandon Lewis said: "The LSL figures are an inaccurate reflection of the private rented sector, their methodology exaggerates rent increases by only looking at new contracts."
He added: "This Government is delivering the homes this country needs, including homes for the private rented sector. There are now 700,000 more homes in England than there were in 2009, housebuilding is up 16% compared to last year."
Campbell Robb, chief executive of charity Shelter, said: "Our advisers are hearing from families every day who are struggling to pay the rent.
"So while most of us are thinking about what presents to put under the tree this Christmas, we know that some parents will be wondering whether their children will have a home at all.
"The only way to end this madness is for politicians to commit to building the genuinely affordable homes we desperately need."