Rents rise 'twice as fast as wages'

Private sector rents have risen twice as fast as wages over the last year, a major lettings network has found.

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Average rents across England and Wales stood at £753 per calendar month in November

Private sector rents have risen twice as fast as wages over the last year, a major lettings network has found.

Average rents across England and Wales stood at £753 per calendar month in November, representing a 1.6% increase compared with the same month a year ago, according to LSL Property Services, which owns chains Your Move and Reeds Rains.

LSL compared the annual increase with Office for National Statistics (ONS) labour market figures showing that wages have risen by 0.8% annually, with pay before tax standing at £1,941 per month.

London recorded the biggest annual increase in rents, with a 4.4% increase pushing the typical rent paid in the English capital to £1,153 a month.

Meanwhile, the East of England saw the biggest year-on-year drop in rents, with a 5.5% decrease taking average rents to £721. Rents in Wales rose by 2.4% year-on-year to £565 on average.

The South West recorded the biggest month-on-month increase in rents, with a 1.1% rise taking the average rent to £721. The sharpest monthly drop was in the West Midlands, where they edged down by 2.6% to £542 typically.

The typical rent paid across the country in November was 0.7% or around £5 lower than an all-time series high of £758 recorded for the month of October, reflecting the usual seasonal dip as activity slows down before Christmas.

The study also showed that tenant finances continued to improve in November, with just 6.6% of all rent late or unpaid, marking the lowest figure since records began five years ago.

The new phase of the Government's flagship Help to Buy Scheme, which offers state-backed mortgages to people with deposits as low as 5%, was launched in October .

But critics of the scheme argue that it is pushing up demand for homes without a big increase in the supply of properties on the market and the imbalance this causes is helping to fuel an increase in house prices.

They say rising house prices mean that aspiring homebuyers face having to either put more cash aside for a deposit to keep up with the increases or take out a bigger mortgage and stretch their borrowing further.

David Newnes, director of LSL Property Services, said: "Building more homes at a serious pace is the only way to avoid stagnation in the housing market - the property industry cannot grow by competing ever more fiercely over fixed resources.

"But to make new homes affordable they will also need to be purpose built for all tenures. Private renting has been growing for decades and new supply will need to cater for the sector for decades to come."

There have been some signs of the squeeze on households easing this week, with the ONS reporting that the Consumer Prices Index (CPI) rate of inflation fell to a four-year low of 2.1% in November as the rise in the price of food eased. But large rises in energy bills have yet to take effect in the inflation figures.

Emma Reynolds, Labour's shadow housing minister, said: " The housing market isn't working because there simply aren't enough homes around for young people and families that want to buy but are forced to rent."

LSL's study is based on rents achieved on around 20,000 properties.