New data suggests a £100 property shock is currently hitting consumers hard, with rent hikes constantly eclipsing the rise in wages, thus perpetuating the cost of living crisis for many tenants. Rents have seen an 8.4 per cent annual jump as of August, pushing the typical monthly cost to £1,286, the Office for National Statistics (ONS) reports.
This increase notably outstrips the 5.1 per cent climb in wages, amidst cautions that impending legal changes concerning rental properties by the new government might prompt numerous landlords to exit the market.
The proposed legislative adjustments aim to better protect tenants, implementing measures like a prohibition on ‘no fault’ evictions and necessitating landlords make their properties more energy-efficient and address issues including dampness and mould growth.
Breakdowns from the ONS show average rents climbing to £1,327 (8.5 per cent) in England, £752 (8.5 per cent) in Wales, and £969 (7.6 per cent) in Scotland. Particularly in England, London experienced the highest rental inflation at 9.6 per cent, while the South West observed the least at 6.4 per cent, both within the year leading up to August 2024.
Ben Twomey, chief executive of Generation Rent, commented on the situation: “Prices in the shops may have stopped rising so quickly, but renters are still seeing our single biggest cost go up faster than our incomes. This isn’t news to renters, who have been feeling this squeeze for a very long time as our landlords snatch away more and more of our wages.”
“The government’s Renters’ Rights Bill, published last week, offers many positives for tenants, but the cost of renting crisis will rage on unless Westminster slams the brakes on these runaway rents.”
Gabriel McKeown, Head of Macroeconomics at Sad Rabbit Investments, commented to Newspage: “In a surprising twist, the UK housing market is showing signs of divergence, with house prices showing signs of cooling while the rental market continues to surge ahead.”
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“This continued strength in the rental market can be attributed to a perfect storm of factors, with a squeeze on mortgage affordability pushing potential buyers into renting. Furthermore, as Chancellor Reeves sharpens her fiscal scalpel with landlords on the cutting block, a mass exodus from the rental market has already begun.”
“Against this backdrop, the impact could be devastating, with the cost-of-living crisis making it harder to save for deposits, trapping many in a rental spiral.”
Nathan Emerson, Chief Executive of Propertymark, highlighted concerns about the rental market, stating: “The rental market continues to operate with a very strong headwind, as many landlords battle increased overheads and uncertainty regarding future legislation.”
“Landlords have faced a complex combination of high inflation, interest rates, maintenance costs and a more demanding taxation structure over the last few years. In turn, this has had a profound impact on their ability to operate and in some circumstances has forced good landlords to make the difficult choice to sell up and leave the sector.”
“To keep rental costs across the UK sustainable, Propertymark is keen to see a progressive approach to future housing strategy and a plan that encourages long-term investment. With an ever-growing population, it is imperative that supply keeps up with real-world demand and that future planning carefully considers key regions where demand is most prevalent.”
Alex Upton, Hampshire Trust Bank managing director of specialist mortgages, commented: “With tenant demand remaining robust and rental stock not quite keeping pace, it’s no surprise that rents are climbing.”
“As the Royal Institution of Chartered Surveyors has noted, while more landlords are bringing properties to market, tenant demand is still outstripping supply. This imbalance is likely to push rents higher as we move forward.”
He further added: “Rather than a mass exodus, what we’re seeing is a refinement of strategy among professional landlords who are keen to adapt to the evolving market.”
“There’s growing interest in more specialist, higher-yielding investments-such as houses in multiple occupation, or semi-commercial properties-that can provide a better return on investment.”