Rents in the UK are rising at the highest rate for decades. Will they keep going up?
With record average rent rises becoming the norm, The Big Issue looks at whether renters face more surges as the cost of living crisis continues to hit households.
Rents in the UK are now at the highest rate on record.
Households are facing rising energy bills and food costs as part of the cost of living crisis but there is no respite when it comes to housing costs.
The median monthly rent in England between April 2021 and March 2022 was £795 – higher than at any other point in history, according to the Office for National Statistics.
While the Westminster government has announced reforms to protect renters’ rights through the Renters’ Reform Bill, there has been little action on the issues driving rising rents, namely high demand for properties and a lack of supply.
How much is rent in UK?
Around 4.4 million households use the private rented sector in England alongside 340,000 in Scotland and just over 200,000 in Wales.
Renters are facing record prices with rents growing at the fastest annual rate for more than a decade.
The highest rises were seen in Scotland – despite a rent freeze that covered the last two months of the year – with rises of 4.4 per cent recorded compared to 4.1 per cent in England and 4.1 per cent in Wales.
There were considerable differences across England with the East Midlands seeing rents increase 5 per cent compared to 3.8 per cent in the North East and South East. London has seen the lowest annual percentage change in recent years due to the impact of the pandemic but rents rose 4 per cent in 2022.
Asking rents have jumped more than three per cent in the last three months outside of London according to Rightmove.
The property site said the national average asking rent outside of London is £1,162 per month compared to £2,343 per month in the English capital where the amount tenants are paying has risen 16 per cent in the last year.
Zoopla’s annual rental market report painted a bleak picture for tenants in December 2022.
The property portal reported that asking rents were up 12 per cent in 2022 to a monthly average of £1,078 per month.
Asking rents increased fastest in the largest UK cities, according to Zoopla, with rents in London up 17 per cent – equivalent to £273 per month.
Manchester saw an increase of more than 15 per cent, in Glasgow the rise was 14 per cent while Bristol, Sheffield and Birmingham all saw rents surge more than 12 per cent with Zoopla reporting demand outpacing supply.
It’s not just the private rental sector that has seen rent rises, tenants in social housing have also seen their rents rise by 4.1 per cent as of April 2022. The rate of whether housing associations can increase or decrease rent is set annually at one per cent higher than the current CPI inflation rate.
With inflation now over 10 per cent, the Social Housing Action Campaign called for rents and service charges to be frozen for 2023/24.
The government stepped in to cap rent increases at 7 per cent rather than the 11.1 per cent. Chancellor Jeremy Hunt, who rejected alternative options to cap rent rises at 3 or 5 per cent, announced the cap at his Autumn Statement insisting the measure will save tenants up to £200 a year.
The short answer to why rent is so high is because there is a shortage of affordable housing.
There is a housing crisis in the UK because not enough homes have been built by successive governments in the last few decades at a time where social housing stock has been sold off to the private sector through Right to Buy or demolished and not replaced.
An estimate from the National Housing Federation and Crisis found around 340,000 new homes should be supplied in England each year with 145,000 them to be affordable.
The Conservative government has previously targeted 300,000 new homes in England – a 2019 manifesto commitment – but is yet to hit that mark. In 2020/21, 216,000 new homes were supplied, down from 243,000 in 2019/20 largely down to the impact of Covid.
Meanwhile areas like Cornwall where tourism has seen a surge in short-term lets through the rise of Airbnb in recent years faces even more pressures on demand.
The private rental sector has picked up the slack in the meantime. While the number of people relying on the sector for a home fell in England between 2016 and 2019, the sector has grown again since the pandemic hit.
“UK rental growth is being driven by high rental demand and limited supply, trends that are more pronounced in city centres,” said Gráinne Gilmore, head of research at Zoopla.
The rising rents mean tenants are staying put rather than moving to a property where they would pay more rent. Zoopla found tenants are staying in rental properties for an extra five months in 2022 compared to five years ago.
Rightmove found the gap between supply and demand has continued to rise in the last year with a 20 per cent increase in households looking for properties while the total number of properties to rent is down almost 10 per cent.
However, every region in Great Britain saw a jump in new properties to rent except London where supply was down by almost a quarter.
Tim Bannister, Rightmove’s director of property data, said: “A shortage of rental homes and strong demand for the properties available has led to a greater number of tenants choosing to renew their leases and stay put, rather than re-enter a competitive rental market.”
Letting agents Foxtons said almost 30 applicants were competing for each property in London in September 2022.
Will rent prices go down in 2023?
Rising rents are having an impact – recent Ministry of Justice figures show the number of tenants evicted by private landlords after falling behind on rent is the highest since records began.
More than 3,700 households were evicted from private rented homes in England between July and September 2022, Ministry of Justice statistics revealed.
“Private renters are under stress like never before. The rising cost of living has pushed thousands into rent arrears, who now face homelessness as their landlords seek eviction,” said Dan Wilson Craw, deputy director at Generation Rent.
“Even staying on top of rent is not enough for other renters, whose landlords are using section 21 eviction notices to force them out without needing a reason. These properties will often end up back on the market at a much higher rent.”
Experts predict rents will continue to rise with no sign of the supply issue being tackled while renters also face knock-on effects from rising mortgage rates.
Landlords could pass on increased mortgage payments through higher rents while there is likely to be increased competition for rent homes as would-be first-time buyers cannot afford to get on the housing ladder.
Meanwhile, landlord lobby groups have warned landlords could sell up ahead of incoming rent reforms, reducing supply further.
Zoopla analysis in December 2022 found that the stock of homes to rent is 38 per cent down on the five-year average while demand is 46 per cent above average.
So that could see rents rise despite cost-of-living pressures, particularly as some first-time buyers may no longer be able to afford to stop renting as rising interest rates mean a mortgage is unaffordable.
It’s this situation that saw the Scottish government freeze rents over the winter.
That freeze will be followed by a cap to prevent private landlords increasing rent by more than three per cent up to September 30. The rent cap is suspended for student accommodation and there are “agreements from landlords” to keep rent increases for social tenants below inflation in 2023/24.
Tenants rights’ minister Patrick Harvie said the change “recognises the costs have been rising for landlords too”.
Your local vendor is at the sharp end of the cost-of-living crisis this Winter. Prices of energy and food are rising rapidly. As is the cost of rent. All at their highest rate in 40 years. Vendors are amongst the most vulnerable people affected. Support our vendors to earn as much as they can and give them a fighting chance this Winter.
