With property prices still out of reach of many first time buyers, and mortgage lenders demanding high deposits and imposing strict lending conditions, many younger people are either opting to live at home longer with their parents, or move into rental properties according to www.whatnewhomes.com
However, this has led to the number of potential renters far outnumbering the number of available, suitable rental properties. Its estimated that around £200 million needs to be pumped into the housing market to build new housing suitable for renting out to meet the demand over the next few years.
The recent Stamp Duty Holiday did mean that there were more first time buyers able to buy their own house but now that this has finished (March 2012), younger people are once again struggling to afford to buy a house.
But with the increase in number of people renting, there also comes an increase in number of tenants in arrears. It is estimated that around 10% of all tenants in the UK are in arrears by 2 or more months worth of rent. And the Consumer Credit Counselling Service has reported a 55% increase in the number of telephone calls they receive from tenants unable to pay their rent, and around half of these callers cite being made unemployed as their reason for being unable to pay their rent.
A large number of tenants are now actively trying to re-negotiate their rents with their landlords and avoid rent increases. The current rental rate is the lowest it has been in 2 years. Most landlords are content to agree to not put the rent up and stick with the same tenants, so long as they pay their rent on time and in full.
There are now more and more tenants facing eviction from their rental property due to repossessions. Many landlords own their rental properties on buy to let mortgages and rely on the rent to pay the mortgage repayments. If their tenants are late in paying the rent or do not pay at all, the landlord cannot pay the mortgage and will face having his property repossessed. This in turn means the tenants will be evicted. The number of eviction notices being presented to local courts has risen drastically in the last year.
All these factors are down to the current uncertainty with the job market and UK economy. The situation in Europe and the recent Greek crisis did not help matters.
The situation in London should always be looked at separately to the rest of the UK, given the much higher cost of living in the capital and also the large number of foreign investors and tenants. The London rental market remains very strong with an ever increasing number of tenant enquiries and with many tenants opting to renew or lengthen their current lease. The demand for rental property in London remains strong.
And of course the impending Olympic and Paralympic Games has also had a positive effect on the rental market in London, driving prices up. However, it is expected that once the Games are over, there will be a drop in rental rates as properties held for the Olympics are released again and property available will outnumber tenant enquiries.
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