We have all heard that the amount it costs to rent private housing in the UK has been increasing, meaning that many tenants are now struggling to pay for basic things such as their rent, heating and food bills. This has caused widespread concern amongst landlords, as it means that it is very likely that at least some of their tenants will eventually fall into rent arrears, and unless a landlord has a landlord insurance policy with rent guarantee insurance included they will have to find money to pay their mortgages whilst facing a reduced income.
However, when it comes to the exact state of the private rented sector no-one is entirely sure where they stand. There have been an abundance of surveys conducted over the past six months, mainly to try and reveal the extent of the housing crisis and how the upcoming welfare reforms could make matters worse. Many are contradictory, however information presented today is so staggering that it will be difficult for any landlord to dismiss the findings. The Castle Trust, specialists in housing investment and shared equity mortgages, have claimed that compared to 2008, the private rent bill for the whole of the UK has increased by almost eight billion pounds.
Sean Oldfield, Castle Trust’s chief executor said: “Despite mortgage rates being well below their historic average, renting is booming as homeownership becomes more and more of a distant dream. Mortgage payments represent a significant proportion of a household’s monthly spending and many people do not see the viability of owning a home. The risk of rising mortgage rates is a major issue for homeowners with their finances already under pressure and shared equity can play a major role in reducing risks, including the risk of going into arrears, by cutting monthly mortgage commitments.”
One of the main reasons the private rent bill has increased so dramatically over the past few years is the fact that there has been a huge increase in the number of people living in the UK, many of which now live in private rented property. The recent ONS English Housing survey recently revealed that the number of private renters in England in the UK in 2012 is now 3.8 million, which is a twenty three per cent increase from 2008. However, increasing rent prices have also affected the private rent bill, with the average annual rent for a property increasing by seven per cent from £7,956 in 2008 to £8,528 in 2012.