Thursday, 26 July 2012

The thriving rental market of UK

Latest report from Royal Institution of Chartered Surveyors (RICS), states a marked increase in the rental rates of residential property in UK from the onset of the year till month. The increased rental rate has been due to an increased demand over the supply.

One of the effective reason for seeking rental houses is due to the struggling times the economy is challenging people to lead a different style. This had made renting a "way of life". It is for this reason we see the private rental sector growing wherein more household are seen renting houses for a longer time of period. With the house price rising, and mortgage finance becoming expensive, renting is the only way out as it is a feasible option and easy to fund.

Now these rental rates for residential properties are not high everywhere. It is true that rates have roared in general, but if considered city/area wise, the rents could be much more higher/lower than that of other areas. For instance, in London, a two bed house is equivalent to 53% of the average single person's salary whereas the same property in North East of England is equal to 25% of an individual's salary.

Other factor affecting the rent, other than the area is the size of the property. The smallest of the properties have seen a rush of demand for them since they are cheaper. This is good for the landlords holding small property but on the whole, this has been creating enormous demand over supply, thereby only letting to increased rental rate, which in future will have a detrimental effect on the present as well as prospective tenants. While the rental rates for big properties and those in posh areas have registered a downfall, while making the median band of property remain stable.

Many people in UK are considering buying a property but with the higher mortgage finance, renting only seems to be an affordable option. But, however, even here the demand will make sure the tenants pay more rent. Therefore, the rental rates are expected to go up further in the next one year.

The survey by the RICS prompts a positive growth trend of the renting marking from the second quarter of 2012. 13% of the survey participants predicted a rental increase while the rest predicted for the stability in the rental market.

While on the whole the rent market of UK looks too good and promising, there is the problem of rent arrears, with the unpaid rent going up to as high as 10%, around £306 million.

Today, with the changing times and the economic pressure faced, people are choosing to rent rather than to buy. Keeping the factors in mind, it becomes vitally important to regulate the renting sector and provide the best services to the needed.


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