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Rental costs hit £700pm to reach record high

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Rental prices in England and Wales have risen by 0.7 per cent in June and the average rent is now just over £700, which represents a new record high.

High demand for rental property from tenants and the lack of supply of rental property has fed the rise in rental costs, in part caused by the difficulty first-time buyers have in getting onto the property ladder, has led to rental costs rising for the fifth month in succession, according to the latest LSL Buy-to-Let Property Index.

In June, the average rent in England and Wales breached £700 for the first time, rising from £696 in May to £701 in June. Rents in London are the highest, reaching £1,006 in June and rising at the fastest pace, an annual increase of 6.9 per cent.

The capital is also seeing an increase in cases of gazumping where a landlord rejects an accepted offer in favour of a higher price.

David Newnes from LSL Property Services said: “In areas like London where competition for rental property is most intense, it’s not unheard of for rental properties to be let within a day of coming on to the market.”

Other areas in the UK that saw a marked increase in the cost of rental property were the West Midlands and the North East which saw increases of 4.6 per cent and 5.1 per cent respectively. Rents increased by two per cent in the West Midlands in the last month alone.

Only three regions saw a fall in rental prices and they were the East Midlands, the South East and Yorkshire & the Humber.

The amount of buy-to-let mortgages available has increased which has encouraged landlords to invest further in rental property. New research released by Mortgages for Business, a buy-to-let broker showed that there are now over 400 mortgage products designed for buy-to-let landlords on the market compared to 298 in April, a 35 per cent rise. This and the lack of supply of rental property mean that rental yield is up from 5.1 per cent in May to 5.2 per cent in June.

Source www.myfinances.co.uk/mortgages/2011/07/16/rental-costs-hit-700pm-to-reach-record-high

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