Buy to let Britain booms amid mortgage famine – but can it last?

Average rents in London now exceed £1,000 a month – or £1,025 to be precise – for the first time, according to a survey of 18,000 flats by LSL Property Services.

Rents in the capital increased by 6.6pc last year – and by 4pc across England and Wales to a national average of £713 a month – as rising numbers of people find it impossible to buy. The house price crash that many wish for  has yet to materialise and house prices continue to rise in London. Meanwhile, credit crunched banks and building societies remain reluctant to lend.

According to the Council for Mortgage Lenders, only about 189,000 first time buyers secured loans last year, compared to an average of nearer 390,000 a year before the credit crisis.

No wonder Scottish Widows predicts that by the time tuition fee increases have added to graduate debts, the average age of first time buyers in Britain will rise to 44. It was 27 just a few decades ago.

Meanwhile, everybody has to live somewhere and it all adds up to good business for buy to let landlords. David Newnes, managing director of LSL said: “In the last two years, average rents have risen by more than £50 a month.

“With significant improvement in the number of buyers able to secure a mortgage unlikely in the foreseeable future, competition for rental accommodation will not drop and further rent rises remain on the cards. Recent graduates moving for their first jobs have further exaggerated the long-term and growing demand from frustrated buyers. ”

Rising numbers cannot even afford to rent a flat of their own. Jonathan Moore, director of Easyroommate.co.uk, said: “Lenders’ unrealistic deposit requirements, combined with hefty house prices have left the private rented sector groaning under the strain of demand from frustrated first-time buyers.

“Such strong competition for limited accommodation is taking its toll on rents, and they will continue to climb for as long as the mortgage market remains at a standstill. As rents rise, driving down affordability in the private rented sector, many renters are cutting costs by turning to flatshares.”

Others are simply failing to pay their rent. According to LSL, 10.7pc of all the rent due last month went unpaid – an increase in arrears of nearly a fifth over the last year. Even when demand consistently runs ahead of supply, there is only so much the market can bear before signs of strain start to show.