High rents could lead to debt problems

Tue, 19 Jul 2011

Debts could become a major worry for more Brits as continued increases in average rental values put more pressure on finances .

According to IPINGlobal.com, there is a real risk of tenants defaulting on their bills due to the high lettings costs in the UK.

LSL Property Services recently revealed that average rental prices reached a record high last month, pushing above the £700 per month barrier for the first time.

IPINGlobal.com researcher Peter Mindenhall explained that wage rises simply cannot keep up with the changes.

"As interest rates rise, we will likely see a rise in defaults because the money at a consumer level simply is not there to support the need to raise rental prices, due to rising unemployment and lack of wage increases," he said.

The expert added that buy-to-let investors should compare properties and prices at "a local level", rather than relying on figures for a larger area.

"Regional average pricing can be incredibly misleading and not granular enough to make an accurate judgement on the viability of a property investment," he said.
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