UK Rent Increases: What's the cause & when will it stop?
According to recent data from the Office for National Statistics (ONS), rents in the UK have reached an all-time high, showing a significant 5.5% increase in the year leading up to August. This marks the most substantial rise since the ONS started tracking rents in 2016.
What is the cause of UK rent increases?
The primary driver behind this surge is the disparity between supply and demand. Property experts at Rightmove have noted a remarkable increase in tenant enquiries, with the average rental property in Britain receiving three times the inquiries compared to pre-pandemic levels. Unfortunately, this rise in housing costs coincides with escalating energy bills and grocery expenses, making it a challenging time for households.
To put the figures in perspective, the median monthly rent in England between April 2022 and March 2023 stood at £825, the highest on record. According to Zoopla, rents now account for over 28% of average pre-tax earnings, surpassing the 10-year average of 27%. Notably, rental affordability has hit a decade-low in seven out of 12 UK regions, with London residents facing an even more significant challenge, as rents consume around 40% of gross earnings.
Will rents continue to rise in 2023?
Recent figures from the Ministry of Justice (MoJ) reveal a concerning trend – the number of tenants being evicted by private landlords continues to rise. Since 2022, there has been a staggering 40% increase in no-fault evictions, with 2,228 households served a Section 21 notice between April and June this year alone. Sadly, this surge in evictions has left low-income tenants with fewer affordable rental options, as local housing allowance has not kept pace with the rising payments to landlords.
Experts predict that rents will continue to climb, exacerbated by a persistent lack of supply. The RICS UK Residential Survey from July 2023 highlighted a significant increase in tenant demand, with more than half of the respondents reporting a surge. This heightened demand, coupled with a 6% decrease in available rental properties, indicates an enduring mismatch between supply and demand. As a result, rents are likely to rise sharply, amplifying the challenges faced by renters in the midst of the cost-of-living crisis. Making it harder for tenants to rent privately and instead look to social housing for affordable accommodation.
However, there is a glimmer of hope - Rightmove's data suggests a potential shift in the long-term landscape. Demand has eased by 17% compared to 2022, and available supply has increased by 14% over the same period. While it may take some time for these changes to reflect in rental prices, this improvement in the balance between supply and demand could eventually lead to a significant slowdown in yearly rent increases.
What can landlords do to support the housing crisis?
Landlords, in light of recent developments such as the government's reconsideration of EPC standard regulations and the uncertain status of the Renter's Reform Bill, it is crucial not to succumb to panic. Seeking advice from experts, particularly if you are a portfolio landlord, is highly advisable.
Despite these challenges, it's important to recognise that the future remains promising for landlords. The demand for housing will always be there, especially in the social housing sector, where currently thousands of individuals and families find themselves in temporary accommodations. As a landlord, your enduring commitment not only offers financial benefits but also allows you the opportunity to make a significant difference. By providing stable housing, you play a pivotal role in helping families find their forever homes, a deed that brings immeasurable pride and fulfilment.
Joining a scheme like Elliot Leigh Guaranteed Rents will bring you peace of mind, ensuring your property is managed and your income is stabilised throughout the entirety of your lease agreement.
In the meantime it's important to stay informed, consult experts, and remember the vital role you play in meeting the ongoing housing needs of our communities.