The cost of renting is driven to a record high as a lack of properties to buy sparks bidding wars

The red-hot housing market is finally showing signs of cooling. But the same cannot be said for the rental market

After months of soaring prices, the red-hot housing market is finally showing signs of cooling. But the same cannot be said for the rental market. 

As the country gets back on its feet and workers return to the office, letting agents have been bombarded with inquiries from renters. But many landlords have sold up and a lack of supply of properties means soaring numbers of people are being priced out. 

The cost of renting has jumped to a record high of £1,007 a month — up 6.2pc on the previous year, according to property site Rightmove. And some landlords are now demanding deposits of up to six months’ worth of rent. 

Other would-be tenants are being asked to find guarantors with incomes as high as three times the annual rent. Competition is also fierce, sparking bidding wars as renters fight to secure one of the few properties on offer. 

In England, just 168,634 of the 4.7million private rentals available are actively seeking new tenants, according to buy-to-let specialists Sequre Property Investment. And many flats and houses advertised by letting agents are being snapped up within hours, with some people not even viewing them in person first. 

While some tenants are being ‘gazumped’ by others offering to pay up to 25pc more than the advertised rent. And it’s not only younger renters affected. In England, one in five families — more than 4.4 million — live in privately rented accommodation. 

One 68-year-old man from Sudbury, Suffolk, has been trying to find a new place to live for three months. But nine in ten letting agents fail to return his calls and he has had to pull out of offers after they demanded three months of rent upfront. 

Keith Grinsted, a freelance business writer, says: ‘The system seems to be waited against tenants like myself. I can’t afford to pay three months’ rent in one go but the letting agents and landlords know they can do what they like because so many of us are looking.’ 

Charity Citizens Advice has seen a 30pc increase in the number of people asking for help with costly deposits or advance rent payments in the past 12 months. Dan Wilson Craw, of campaign group Generation Rent, says agents are using demands of up to six months’ rent upfront to ‘screen out’ people who rely on benefits. 

He adds: ‘We have heard from people who have struggled because they were furloughed.’ Experts say the stamp duty holiday is to blame for leaving a diminished number of flats and houses in its wake. While hundreds of thousands of landlords had already sold up before the pandemic arrived, following a clampdown on buy-to-let investments. 

And around half have lost rental income after evictions were banned, claim the National Residential Landlords Association (NRLA). So when house prices soared at their fastest pace in 17 years, many who had pondered selling took the plunge. Meera Chindooroy, deputy director of policy and campaigns at the NRLA, says: ‘In the three months up to June, around 8pc of our members were selling properties but this figure was 14pc in central London.’ 

The stamp duty has also led to a rise in the number of renters seeking accommodation after many homeowners rushed to sell without waiting to find somewhere else. Estate agent Hamptons says around one in ten new tenancies agreed were with homeowners who had sold up. 

Rentals in Glasgow and Cardiff had some of the highest numbers of viewers, with more than four renters enquiring about each property, claimed rental site SpareRoom. 

Surveyor Alex McNeil, of Bramleys in Huddersfield — who has worked in property for nearly three decades — says: ‘Normally we would have between 25 or 30 properties but now we are down to around two or three and last week we just had one. Rental values have significantly increased as a result and a three-bed semi that might have been rented out for £650 a month 18 months ago could go for up to £800 now.’ 

Priced out: Keith Grinsted, 68, left, and Emily, 25, who did not want to give her surname

Agents in areas such as Cornwall and Kent are seeing between 30 and 50pc of rental properties go for over their asking price, according to trade body Propertymark. The South East recorded the biggest rent surges, with the average monthly payment climbing by 16pc in the last year from £1,066 to £1,237, according to Hamptons. 

Only inner London renters saw payments fall in the past 12 months from £2,417 to £2,152 on average. But Olivia Pegrum, a senior lettings director for Hamptons in London, suggested this could be short-lived as workers begin to return to the capital. She adds: ‘I’ve never seen anything like it in the rental market before.’ 

She claimed a two-bed flat in Balham, south London, went for 16pc more than its previous letting price when five bidders made offers within 48 hours. 

‘This is common, especially for properties with outside space, and rents can be up to 25pc higher than the previous tenancy,’ she adds. And last month, the firm recorded a 13 pc rise in rental inquiries for its London properties compared to July last year. 

Yet the number of properties on its books fell by a record 42 pc over the same period. Emily, 25, who did not want to give her surname, was told she could only rent a one-bed flat in Bermondsey, south London, if she had a guarantor with an income three-and-a-half times the annual rent. 

She estimated that would have been around £50,000 and more than her parents — a postman and part-time cover teacher — earned combined. When Emily asked if there was an alternative, she was told she could pay the year’s rent upfront — around £14,000. She says: ‘The agent made out it was because I was on my probation period at work. They said the landlord was worried about tenants losing their jobs. But it does not feel justified.’ 

She found another one-bed flat in the same area with another agent. Nathan Emerson, chief executive of Propertymark, says the Government’s new Breathing Space scheme is adding to landlords’ concerns. It gives anyone in arrears up to 60 days of legal protection from creditors, leaving landlords waiting longer for their rent. 

He says: ‘While it’s not right to do so, this has led to circumstances where landlords are asking for multiple months’ rent upfront.’ The eviction ban in England ended on May 31 and on June 30 in Wales. In Scotland, the ban has been extended in some areas to March next year.   

This post first appeared on Dailymail.co.uk