Property drought ramps up rent levels

Rent levels in the UK are fast rising as demand for properties outstrips supply

A lack of good quality property is threatening the UK rental market, according to new research by Association of Residential Lettings Agents (ARLA) as demand continues to outweigh supply.

The report showed that during the second quarter of 2011 as much as 74% of members reported that there were more prospective tenants than properties available - a figure that jumps to 82% in central London.

This compares to 10% of members reporting an undersupply of rental homes two years ago and 8% in central London.

ARLA said the problem is being aggravated by the fact that first time buyers are still struggling to get mortgages and are being forced to rent properties instead. The report also found that 56% of its members said rents had risen over the past six months, compared with 53% three months ago.

ARLA operations manager Ian Potter commented, "There is a clear shortage of homes to buy in the UK. Faced with this, many people are turning to rental homes as a more flexible option than buying; yet as our research highlights the dearth of properties... is showing no signs of improvement."