First-time renters need parents’ help

Soaring costs are forcing more first-time renters to ask their parents for help with the deposit.

Letting agent LSL Property Services said UK rents rose for a six month running in July with an average monthly rent now a record £705, a 0.6 per cent increase on June and 4.2 per cent higher than a year ago.

David Newnes, an LSL director, said that as well as putting pressure on people renting and trying to save for deposits to buy a house, it also means the deposit on rental homes is becoming a serious hurdle.

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“It is increasingly commonplace for renters to get parental help to fund their first deposit on a rental home, with the typical one-month deposit on a property in London more than £1,000,” he said.

Rents are continuing to be pushed up by strong tenant demand, as would-be buyers are forced to put their plans on hold due to strict mortgage availability criteria and the substantial deposits required by many lend- ers.

London saw the fastest rise over the past year, with rents up by 7.1 per cent to £1,009, but all regions in England are higher than a year ago.

The North East, with a rise of 5.5 per cent, and the Midlands, up by 4.8 per cent, recorded the second and third fastest rates of increase.

On a monthly basis, the greatest rises in July were in the South East at 1.7 per cent, and 1.4 per cent in the East Midlands.

The West Midlands, Yorkshire & Humber and the North West saw declines in the average monthly payment compared to June, but the trend overall is higher, said LSL.

Mr Newnes said: “Rents are on an upward trajectory and it is unlikely tenants will gain respite any time soon. Demand from frustrated buyers is underpinning buoyant competition for rental homes, enabling landlords to increase prices.”

The competitive environment has also enabled landlords to take a tougher line on renters not paying on time with the level of arrears dropping for the third consecutive month.

Landlord arrears are now lower than the owner-occupied sector for the first time in three years, but LSL expects tenant finances to worsen as the economy struggles and public sector job cuts accelerate.