A business consultancy’s analyst has an intersecting ‘take’ on the PRS rents surge when claiming it has a positive effect on house prices in spite of the cost of living crisis.

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Sarah Coles of the business consultancy says the surge in rent increases over the last twelve months of an average of 11 per cent is “the hidden string” keeping the house sales sector buoyant.

She says: “Enormous pressure from runaway bills, rises in mortgage costs, and big drops in consumer confidence has historically meant house prices started to weaken. And while nobody is ruling it out eventually, for now they are riding high.

“Rising rents are the missing piece of the puzzle for those trying to understand how house prices are still rising so quickly. Rents have bounced back from falls during the pandemic, and are up 11 per cent in a year. London, which suffered particularly during the race for space, has bounced back even harder – with rents up 15 per cent.

“Rising rents knock increasing mortgage costs into a cocked hat, so moving from a rental property into an equivalent home with a mortgage will see your monthly costs fall.”

Sarah concedes that although the rise in rents does make it far more difficult for tenants to save up a deposit for a first home, it is in their best interest not to put off buying their own ‘home’ if at all possible, sooner rather later.

Coles says: “A new let in London will cost you over £20,000 in rent over the next 12 months, which is money that may as well be paying off your mortgage. Meanwhile, although house prices may well rise more slowly in the coming months, we’re not seeing any widespread conviction that house prices will actually fall – so you could still see property get more expensive while you wait” she tells renters.

She also says there is a somewhat ‘hidden’ plus for home owners due to inflation as it does over time gradually reduce the value of the debt. Those who bought property last year will have seen rising inflation reduce the true value of their debts by 7 per cent and this is before repayments are taken into account.

Rental increases are further exacerbated as there is simply not enough PRS ‘homes’ out there for the ever increasing tenant demand.