Prices for rental housing have been rising steadily across the UK

Rents for residential property in the UK continues to grow steadily, reaching in the third quarter of 2014 the average value of £903 pounds a month. During the quarter, the average rent climbed to £21 pound in the second quarter of 2014, it was at £882 lbs . Over the year, rents rose 5.2 %, the fastest growth over the last 32 months.

The growth in rental prices of residential property recorded in all UK regions, except the Midlands. But the lead, of course, London, where for a year from the third quarter of 2013, prices rose by 9.8%. This is followed by the East of England, where rental prices rose by 7.3%.

In addition, in all regions and reduced the level of indebtedness of tenants to pay rent on time.

If you look at the rent growth in the context of the size of the property, the more property, the faster growing the cost of rent. So, for a property in the UK with 4 more bedrooms and a price increase was 5.8 % for the year and reached an average value of £1524 pounds per month.

Rental housing with three bedrooms rose by 4.8% for the year and now costs on average £956 pounds per month.

The cost of housing with two bedrooms rose in price most slowly , 4.1 percent , and the average value of residential property with two bedrooms has reached £822 pounds.

Meanwhile, the Bank of England intends to give creditors additional powers, under which borrowers “Buy to let” ( buy to rent) in London and the South of England will require 40% Deposit to get a mortgage.

In terms of powers, banks will conduct the stress tests, which will reveal what amount of income from the lease will guarantee the coverage of all of the payments on a mortgage loan even in case if the Bank of England will raise interest rates on loans.

The average rental value should cover at least about 125% of the cost of payments on a mortgage loan. This ratio will allow the homeowner not to fear of rising interest rates and at the same time will allow him to gain some funds, which can be used to improve and upgrade their property. The average homeowner in the previous two years removed from their property 5% rental income a year, despite the fact that the interest rate on a mortgage was 3.8%.

However, in 2014 this ratio has improved significantly and those homeowners who bought property in 2014, can derive an income of about 7% per annum and already 205 % unable to cover your mortgage loan income from the rent.

Stress testing in the lending process, according to the plan of the Association of Mortgage Lenders in the UK, will help to minimize the risks on both sides of the transaction and ensure its security.

® Alice Morgan 16.10.2014

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