Tuesday, 17 May 2011 2:40 PM
Private tenants in Belfast are paying 4.2 per cent more in rent than this time last year, according to online lettings site Citylets.
The increase was far greater in one-bedroom apartments, where rents have risen by almost eight per cent in the past year.
Citylets cited the growing number of would-be first-time buyers unable or unwilling to get onto Northern Ireland's property ladder as a prime factor in the rent hike.
The average rent paid at the end of March 2010 was £544, while this year it was £567. The cost of a one-bedroom apartment rose from £456 to £493.
Two-bedroom flats in Belfast now typically cost £587 per month – three per cent more than last year – but the rent on two-bedroom houses remains the same as last year, at £446. Three-bedroom houses have increased in price by 4.5 per cent to £531 per calendar month.
Dan Cookson, market analyst at Citylets, said: "Estate agents right across the Belfast City and Greater Belfast areas have seen no let-up in demand from private tenants still wary of making the move into home ownership.
"Although the number of mortgage products on offer from the banks is increasing, the size of the up-front deposit required continues to deter many people from getting onto the property ladder just yet."
While ongoing fears about public sector job losses and rising utility bills can be seen as partly responsible for potential buyers' hesitation, the increase in rents is unlikely to help potential buyers in their quest to save enough for a deposit.
Cookson said, "Belfast remains one of the best value cities in the UK and Ireland in which to rent a property, and for private landlords who bought before the boom, rental property in Belfast still offers steady, long-term investment potential."
However, prices in Northern Ireland are less predictable over the long term because of upcoming changes to the rates rules: from October 2011, owners will need to pay rates even during void periods, regardless of whether their property is for rental or not. This could cost the owner of an empty two-bedroom terraced home £750 extra per year.
"Demand for rental properties tends to be at its strongest between July and September, so we expect the market to remain strong until then, but we’re a little more uncertain about October onwards," said Cookson.
"We could see more rental properties coming on to the market as property owners try to recoup the rates money by getting in tenants or, for those who are already in the rental market, we could see a bigger adjustment in prices as landlords drop rents to avoid lengthy gaps between tenancies."