With the number of new homes being built in Britain at an historical low, rental values across much of the country are rising as more people are forced to live in rental accommodation, a new report reveals.
Fresh data released by LSL, which owns the Your Move and Reeds Rains property chains, shows that average rents increased by 1% last month and were 2.9% higher than a year ago.
The average rent paid by private tenants in England and Wales reached a new all-time high in July, of £725 a month, the letting group said.
The hike in rental values is owed mainly to the lack of new homes coming onto the market as well as the ongoing mortgage lending constraints.
The volume of new homes started by housebuilders in England has also fallen again, to the lowest level for three years.
Government figures released yesterday (Thursday) showed that only 21,540 new homes were started by property developers during the second quarter of this year, down 24% compared to the same period a year ago and a 10% drop from the first three months of the year.
The falling supply of new build homes is placing upward pressure on rental prices because the UK's population continues to grow, while the lack of mortgage funds is preventing many would-be purchasers from being able to buy property.
Unsurprisingly, rents were rising fastest in London and the South East, reflecting the greatest supply-demand imbalance nationwide, with the average rent in the capital now stands at £1,057 a month.
Bold action is needed to help the "faltering construction sector", according to Gabrielle Omar, architect and star of the most recent series of the TV-reality show The Apprentice.
She commented: "Frustrated first time buyers are finding it difficult to get a foothold in the property market simply because they cannot afford it. With less new homes being built and inflated rent prices, prospective home buyers are left with limited options."
Gabrielle continued: "The figures depict a problem with the housing market which needs to be addressed quickly, the population is on the increase and the lack of sufficient housing will only continue to make it difficult for first time buyers and renters alike. The decline in the construction of new houses can be justified by the current economic climate, although the situation could be improved if planning laws were more relaxed to cater for the rise in demand."