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June 9, 2011 11:59 am

Rental costs will keep rising

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Increased tenant demand and a shortage of supply of rental property coming onto the market is pushing rents higher, and more increases are expected in the coming months, according to a new survey.

More surveyors reported that rents rose rather than fell in the three months to the end of April, according to the Royal Institution of Chartered Surveyors (Rics).

Although rents increased across the whole of the UK, London and the south-east continued to see the most notable rises. Surveyors said rents in some areas had risen so far that previously affordable homes were now out of reach for many people.

“Although we are beginning to see more mortgages aimed at first-time buyers, many potential homeowners are still restricted from getting a foot on the property ladder, leading to increased demand in an already oversubscribed rental market,” said Rics spokesman James Scott-Lee.

“There has been a small uplift in supply, but the imbalance between demand and availability can only mean rents will continue to rise.”

A new report from Cluttons, estate agents, said tenants in central London can expect increases of between 8 per cent and 10 per cent following record increases of 19.1 per cent in 2010. It said existing tenants renewing their contracts face smaller rises in the region of 4 per cent, as landlords concerned about the general economic outlook opt to retain quality tenants rather than risk void periods.

Looking ahead, 33 per cent more surveyors were predicting further rent rises than those who thought rents would fall, with expectations that the cost of being a tenant would increase highest in London, followed by the Midlands, the south-east and the north.

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