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The number of people renting a property in the UK has increased by 50% in the past 12 months as tighter lending conditions deter buyers from the property ladder.
Your Move, Britain's second largest lettings agent, said the number of leases commencing in September rose 4.34% from August, and in the nine months to September the number of people moving into rented accommodation rose 45% compared with the same period the previous year.
Property website Hometrack has estimated that 1.6 million 20- to 39-year-olds are renting because they cannot afford to buy a flat or a house. It is estimated that a 20% fall in property prices would still open the market up to only 600,000 young buyers.
David Newnes, managing director at Your Move, said: "As banks put a stopper in the bottle of mortgage finance, potential buyers have to stay in rented homes for longer than they have in the past. The lettings market is thriving across the UK - we are seeing the strongest tenant demand we've ever had, far beyond normal seasonal fluctuations."
Despite a cut in the Bank of England's base rate two weeks ago, several banks and building societies raised their mortgage rates this month. Nationwide increased its rates on its tracker mortgage deals yesterday.
Matthew Carter, divisional director for mortgages at Nationwide, said: "It is regrettable that we have to increase our tracker rates but we must take into account ongoing volatility in the wholesale markets and the high cost of funding."
Richard Donnell at Hometrack said: "Even a sharp fall in house prices won't bring that many people into the market, thus fuelling rental demand for the next 18 months at least."
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