Rental Market News

Rental market booms as house prices slide

Demand for rental properties is at record levels as people delay plans to buy their own homes because of the downturn in the housing market.

The proportion of letting agents reporting that demand is outstripping supply is now at a high of 39 per cent, according to the Association of Residential Letting Agents (Arla), with the imbalance highest in Greater London and the South-east. The report echoes the findings of recent studies which have revealed a rental boom off the back of turmoil in the home-owning market.

The mortgage lender Paragon said strong demand had pushed the average cost of renting a home in England and Wales through the £1,000 a month barrier for the first time.

"In many places this has had a positive effect as it has allowed the rental market to provide stability in housing at a time of volatility in the sales market," said Ian Potter, the head of operations at Arla.

Other reasons for the boom in demand included a sudden influx of desirable properties coming on the market, Mr Potter added. "We are seeing corrections in individual locations throughout the country. The main cause of these is the development of new blocks of two-bedroom flats coming on-stream," he said.

The strong level of demand has led to a further fall in the average length of time a property is empty between tenants, falling from 24 days to 22 during the past three months. There has also been an increase in the average length of time tenants stay in a property, rising from 16.1 months to 16.3 months.