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Heightened tenant competition causes rents to rise

From Property Talk Live on May 12, 2014

UK rents rose to £762, up 1% on month and 8% annually as competition in the market heats up according to the recent Sequence National Rental Report – April 2014.

The number of new tenancies agreed shot up by 16% on month and 20% annually whilst in London rents have risen 2% on the month and 4% annually to £1,427.

The Capital is a hive of activity, with the number of new tenancies up over a third on last year (37%) and 15% on month. 6 prospective tenants now chase every new rental property on the market, up from 5/1 last month. Mortgage applications from landlords also increased 8% on month and 3% annually.

Stephen Nation, Head of Lettings for Sequence, a 300 branch network which includes Barnard Marcus, William H Brown, Fox & Sons and other leading brands, comments:

“The figures this month highlight just how much the rental market is growing and proves that a strong sales market does not impinge on the strength of the rental market. Rents are up across the UK, up 1% in March and 8% annually, and this is driven by the high levels of demand we have seen across the country, with new tenant applications rising 21% in March alone. The number of new rental properties coming onto the market has failed to keep up with demand, remaining flat on the month, which is why we have seen a growth in rents.

“London continues to outpace the rest of the UK, with the supply and demand divergences even more acute in the Capital. There are now six prospective tenants chasing every new rental property, with tenant applications rising 23% in March and 31% annually. There is little doubt that this undersupply of property is creating more competition in the market and that has caused rents to rise by 2% this month.

“Encouragingly, buy-to-let mortgage applications have risen by 8% on month and 3% annually, which is the sharpest growth across all of our mortgage products, highlighting that buy-to-let remains the investment of choice and should result in greater volumes of rental stock in the months ahead.”

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Source: Property Talk Live