Rental demand grows 65% as mortgage approvals fall

Monday, 22 September 2008 04:12

Demand for rental property rose 65 per cent in the last 12 months, as the credit crunch makes buying harder and falling property values turn people away from the market.

Estate agents Your Move found in August a 12 per cent rise in rental leases starting from July and over January to August they were up 45 per cent on the same period of 2007.

The rise in demand for rental property is being put down to the fall in mortgage lending.

The latest data from the Council of Mortgage Lenders show a 36 per cent fall in mortgage lending in the last year.

While Bank of England figures show mortgage lending fell again in July to £14.6 billion, less than half the £31.4 billion borrowed in July 2007.

There were 33,000 approvals for home loans in July, compared to 115,000 in the same month in 2007.

David Newnes, managing director of Your Move, said: "Mortgages are hard to come by and would-be buyers are flooding the rental sector. If you can't get the finance to buy a house, you're forced to rent."

However, he added the rush to renting is not pushing up rents.

"Tenants are benefiting from unprecedented choice as well as competitive rent," Mr Newnes said.

"We might expect the huge increases in demand for rental property to have driven up rents. But demand is being met by supply - sellers who won't accept depressed prices put their homes up for rent instead."

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