In London rents have jumped 19% on average since the pandemic began, Rightmove revealed in July 2021 – the same amount of growth as in the eight years before Covid-19 hit the UK. That includes a 15% rise in the last year – the highest annual rate of anywhere in the country – taking the average rent up to £2,257 per month.
Rightmove also found record rents outside London with the national average asking rent reaching £1,126 per month. That was an increase of 3.5% since the last quarter and almost 12% higher than in June 2020.
It’s a similar story from the Office for National Statistics’ annual private rental market summary.
Between April 2021 and March 2022, the median rent hit its highest point on record at £795 a month but there was great regional variation.
Unsurprisingly, London had the highest median monthly rent at £1,450 a month – almost £500 higher than any other region – with the median rent in Kensington and Chelsea reaching as high as £2,199.
The lowest median monthly rent could be found in Kingston upon Hull, Middlesbrough and Burnley at £450 with the North East lowest region overall with a median of £505.
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In its most recent monthly update, the statistics body found rent prices had risen by 3.2% in the 12 months up to July 2022 – the highest increase since December 2008. London experienced the lowest rise at 2.1% with greater increases elsewhere, most notably in East Midlands where growth reached 4.3%. Excluding London, rents rose by 3.7%.
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% as of April 2022.
The rate of whether housing associations can increase or decrease rent is set annually at 1% higher than the current CPI inflation rate.
With inflation now over 10%, the Social Housing Action Campaign has called for rents and service charges to be frozen when the government decides on 2023/24 rates in November.
Why is UK rent so high?
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.
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“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.
It’s a phenomenon that Rightmove has also recognised, although the property firm did note that the number of new rental listings hit its highest point for the year in June 2022.
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.
“People who had been waiting to see what happened last year are now being faced with record rents and so are seeking out properties where they can have more certainty over their outgoings, with all bills included becoming increasingly sought after.”
Will rent prices go down in 2022?
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.
Between April and June 2022 4,381 court orders were issued for possession of properties due to rent arrears, higher than the pre-Covid peak of 4,648 between April and June 2019.
Overall, 3,405 households in the private rented sector were evicted by bailiffs over the three months, 39% higher than the previous quarter.
Alicia Kennedy, director of Generation Rent, said: “This is the aftermath of the pandemic when many renters didn’t get enough support to cover the rent and are now losing their homes.
“But it’s going to get worse as energy bills climb further and more people face a devastating choice between paying rent, heating their home, and putting food on the table.”
Experts predict rents will continue to rise in 2022, albeit at a slower pace as the cost of living crisis continues to hit household incomes.
But the localised element of the market means areas where demand is at its highest could see the record rises experienced in recent times continue.
“The surge of post-pandemic pent-up rental demand will normalise through Q2 and Q3 however, which means rental growth levels will start to ease,” said Zoopla’s Gilmore.
“Affordability considerations will also start to put a limit on further rental growth although this may occur at different times depending on location. Rents are likely to continue rising for longer in areas which have the most constrained stock levels – currently London, Scotland and the South West.”
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Rightmove’s Bannister said that it will take time for the difference between demand and supply to level out to see rents fall.
“The story of the rental market continues to be one of high tenant demand but not enough available homes to meet that demand,” said Bannister.
“The wide gap that has been created between supply and demand over the last two years will take time to narrow. Until then, this imbalance will continue to support asking rent growth. This has led to our revised forecast of a 8% rise in asking rents by the end of the year up from 5%.”
Zoopla analysis found that the stock of homes to rent is 46% down on the five-year average and there is no sign of the imbalance of supply being dealt with in the short term.
So that could see rents rise despite cost-of-living pressures, particularly 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 has seen the Scottish government take action to freeze rents until at least March 2023.
Announced at her Programme for Government speech in September, Scottish first minister Nicola Sturgeon said emergency legislation would be brought forward to prevent rent increases and ban evictions over the winter to protect families from the cost of living crisis.
“The Scottish government does not have the power to stop your energy bills soaring but we can take action to ensure your rent does not rise,” Sturgeon told Holyrood.
She added: “The practical effect of this statement is that rents are frozen from today.
“Two of the most important and fundamental sources of security for any of us are a job and a home. In times of economic and financial crisis. These can be the foundations that help people through.”