UK rents decline by 0.3 percent in January
Home rental costs in the UK have declined in January for the third straight month as the increased availability of mortgages eased competition in the sector, according to a survey by LSL Property Services.
The average rent in January was £732 ($1,136, €850) per month, a 0.3 percent decline from December and the lowest level since July 2012. However, the monthly rent is still 2.8 percent higher than the rate in January 2012.
The south-east of England witnessed the largest monthly fall in rents, declining 1.5 percent to an average £744. However, the East Midlands recorded a 1.2 percent increase in the rates to £547.
In London, rents declined by 0.2 percent in January to £1,086, but they are still 5.2 percent higher than the year-ago levels.
"An improving mortgage market in January helped take a little pressure off the limited supply of rental property, at a time when the demand from tenants on the move is far from its seasonal peaks," said David Newnes, LSL director.
Looking ahead, LSL projected an increase in average rental rates in England and Wales in the coming months as evident from the reduced pace of decline experienced in January.
"But the dip in competition is not likely to last long," said Newnes.
"The pace of the fall in monthly rents has slowed, and we're already seeing tenant activity pick up."
The Council of Mortgage Lenders recently reported that the number of first-time buyers, who secured a mortgage, is on the rise.
The Bank of England's Funding for Lending Scheme (FLS) have been helping first-time home buyers, as evident from the increased amount of mortgages and home sales. Introduced in August 2012, the FLS enables lenders to provide loans at cheaper interest rates.
BOE data released on 30 January showed that mortgage approvals rose more than economists' forecast in December, helping first-time buyers to get onto the property ladder. The Royal Institution of Chartered Surveyors previously reported that property sales continued to rise for the fourth straight month in January.
The LSL survey also found that tenant arrears declined in January in comparison to the Christmas period, when more tenants defaulted due to the increased spending during the season. The portion of rents that are late or unpaid declined to 8.1 percent in January, compared with 10.1 percent in December.
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