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Competition pushes rents up again
Rents rose at their highest annual rate in London during May, latest figures show
Strong competition among tenants has caused rents to rise for the second month in a row, according to a study.
The average rent rose by 0.4% in May to reach £712 a month, according to lettings network LSL Property Services, which owns chains Your Move and Reeds Rains.
The increase has returned rents to the level they were at in January, before a rush of first-time buyers to beat the deadline for a stamp duty concession in March caused activity in the rental market to slow down.
However, the study suggested that it is not just "involuntary renters" unable to raise a deposit to buy a house who have ramped up the competition in the rental sector, as many people are choosing to rent due to the uncertain economy.
The study said that with people still struggling to get on the property ladder and the flexibility offered by renting amid the uncertain economy, there are unlikely to be big declines in the rents any time soon.
The annual increase in rents has slowed down slightly across England and Wales, with rents 2.3% higher than they were a year ago, compared with 2.4% higher in April.
Rents rose at their highest annual rate in London, where at £1,038 a month they are at their highest amount recorded by the study and 4.2% higher than they were a year ago.
The study suggested rental demand in London is set to increase in the coming weeks as tenants bring forward house moves to try to avoid the disruption of the Olympics.
David Newnes, director of LSL Property Services, said: "The end of spring has brought with it renewed activity in the rental market, and rents have returned to the level seen before the impact of the stamp duty deadline rush by first-time buyers.
"The reality is that thousands of frustrated buyers are still financially trapped between a rock and a hard place. Historically high rents and rock-bottom savings rates are hampering attempts to save for the larger deposits banks now require - not to mention meeting the cost of the reinstated stamp duty tax. In turn, fewer tenants are able to leave the sector, and the strong tenant competition is pushing up rents as a result, making saving for a deposit harder still."
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