What is happening in the UK rental market
Rents across Britain are rising at fastest rate on record
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High interest rates are hitting UK tenants in the pocket as landlords pass on soaring costs.
Latest data from Hamptons shows that average rents on newly let properties rose by 12% year-on-year in August – the fastest since the estate agent's letting index began in 2014. The hike equates to an average increase of £140 per month in rent being paid by new tenants.
Coming on top of higher prices for energy and household goods, the rent increases are yet another "blow for Generation Rent", said the Financial Times. Many young and lower-paid people are now being "priced out of housing lets as well as purchases".
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Why are rents rising?
The number of households privately renting has more than doubled over the past two decades, to five million, according to the 2021 Census.
But tax hikes have fuelled a "landlord exodus" that has resulted in a lack of stock and pushed the rental market to breaking point, said Sky News. Landlords must pay a 3% stamp duty surcharge on additional property purchases, and law changes mean they have lost reliefs that previously allowed them to offset business costs.
As "more landlords leave" the rental market, the news site continued, "rents rise as demand further outstrips supply".
As well as the "mismatch between supply and demand", said the BBC, "pressure on landlords from high mortgage rates" is also pushing up rental costs.
Increased mortgage rates are putting off some would-be first-time buyers too, further increasing demand for rental properties.
Where is rent cheapest?
The South of England is “much more expensive than anywhere else in the country” to rent, said Zoopla.
Conversely, North England, Northern Ireland, Scotland and Yorkshire are on the “cheaper end of the scale”, with average rents below £800 per month. The cheapest region is the North East, with an average of £649 per month.
The North East is also the "most affordable" region in England in terms of average rents compared to average salaries, said Letting Agent Today. Data assembled by cleaning firm Prompt Cleaners showed the region has a mean monthly rent of £597 and average monthly salaries of £2,215.20, which means local employees spend less than 27% of their salaries on letting.
Next in the affordability table is the North West, at 31.34%, followed by Yorkshire and Humber (31.21%), the West Midlands (32.6%) and the East Midlands (31.07%).
Will rents keep rising?
The current imbalance between supply and demand shows no sign of reversing, according to the latest Zoopla Rental Market Report.
By the end of 2023, rental growth is "on track" to be up by 9% annually, higher than earnings growth, which is expected to be 6%.
Can tenants challenge rent increases?
Negotiation is "usually the only way to challenge a rent increase if your landlord has used a rent review clause", said Shelter.
Tenants can also take their landlord to a property tribunal for free to challenge their rent, but "there's a risk that a tribunal could set a higher rent than your landlord is asking for", the homelessness charity warned.
Rent increases are capped at 7% for tenants living in council or social housing. The government has also promised new rights for private tenants. The Renters' Reform Bill would ban "no fault" evictions, and landlords would only be able to evict a tenant under "reasonable circumstances".
However, the bill has been "put on ice", said the Financial Times, amid allegations of "vested interests" in the government whip's office.
And "there has been little action on the issues driving rising rents", said Big Issue, “namely high demand for properties and a lack of supply”.
Marc Shoffman is an award-winning freelance journalist, specialising in business, property and personal finance. He has a master’s degree in financial journalism from City University and has previously worked for the FT’s Financial Adviser, the financial podcast In For a Penny and MoneyWeek.
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A free daily digest of the biggest news stories of the day - and the best features from our website
Marc Shoffman is an NCTJ-qualified award-winning freelance journalist, specialising in business, property and personal finance. He has a BA in multimedia journalism from Bournemouth University and a master’s in financial journalism from City University, London. His career began at FT Business trade publication Financial Adviser, during the 2008 banking crash. In 2013, he moved to MailOnline’s personal finance section This is Money, where he covered topics ranging from mortgages and pensions to investments and even a bit of Bitcoin. Since going freelance in 2016, his work has appeared in MoneyWeek, The Times, The Mail on Sunday and on the i news site.
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