Research from Callcredit Information Group has revealed that those successful in obtaining a mortgage has fallen by 15% in the past eight months.
This has caused a knock on effect in the rental market which has seen an increase of 10% as potential homebuyers switch to renting as they continue to struggle to get onto the property ladder.
High property prices, the end of stamp duty for first time buyers and the tightening in lending criteria by mainstream mortgage providers have all had an impact.
This rise in demand for rental properties has also seen an increase in rental costs of between 2.9% and 4.3% across England and Wales over the past 12 months, with no sign of slowing down as we head into the latter part of the year.
High rental costs are leaving tenants with little disposable income, adding to the battle of trying to get onto the property ladder, for many keeping up with rent payments alone is proving to be difficult with the average tenant reported to be £760 in arrears in May of this year and as the financial strain becomes too much those choosing to move back in with their parents has increased by 23% compared to May 2011.
The knock on effect for some landlords is that they struggle to meet mortgage repayments, this coupled with the added pressure of some lenders increasing mortgage rates, means that they too are running the risk of running into financial difficulties when rents are not paid on time, Callcredit said.
