Rising by 8.7% in the past year, rents in the UK have left tenants struggling to rent affordable housing. According to the Office for National Statistics (ONS) data, the East of England saw a rise of 8.4% in rent bills, while the biggest rent hike was in London with an 11.0% increase.
The housing crisis, coupled with high tenant demand, has caused rents to rise sharply over the past few years. The average monthly rent in the East has now risen above £1,209. Compared to the previous year, tenants spend approximately an extra £100 each month to afford a rented home. In Bedford, even one-bedroom properties are rented for an average of £741.
‘Constant and substantial demand’
“There is a constant and substantial demand for housing,” says Qammer Saleem, director of AF Residential Limited, a private estate agent in Luton. “The limited number of suitable housing options, especially in the market of affordable housing, which doesn’t have higher deposits, and the mismatch between supply and demand, are the reasons behind the competitive market.”
The continuous rent hike continues to impact people in the UK who spend more than 30% of their income on rented homes. According to the latest data on the international student population in England and Wales, the East of England has the highest rate of international students in the UK, but only 41% are employed. The high level of rents is the biggest challenge faced by international students. Workers and low-income families also suffer from high rental prices.
Rent levels are outstripping budgets
One renter told Cambridge Live her rent had risen by 9.3% in 2023: “This increase far outstripped the 6.5% pay increase we both received as teachers last year, not to mention the days of pay we lost, taking strike action to secure even that increase. We’re paying more in rent than ever before and saving almost nothing.” They said that a third of their monthly take-home pay was being paid in rent to a retired homeowner landlord.
High rent is one issue, but on top of that, renting a property requires a deposit. The deposit amount rises along with the rent. The higher the rent, the more deposit is needed. This can often swallow up the prospective renter’s whole salary for a month, or sometimes more. This struggle can leave people no choice but to rely on a food bank. “So many people are having to use our food bank,” says Stephen Thornton from Cambridge City Foodbank.
Changing patterns in the rental market
The demand for rental properties is growing outside the capital, indicating that more renters are seeking housing in areas with strong transport links and burgeoning job markets. The private rental sector has doubled in size over the last two decades. Due to strong competition, many landlords are raising rents for existing renters, further straining the rental market.
“The rents will continue to rise, mainly due to the imbalance in supply and demand,” says Adam Slee, a UK-based property investor who knows the sector well. “We still have a housing shortage, plus the cost of owning a property has become ever more expensive with interest rates and inflation on bills. Many just do not have the cash needed for a deposit to buy. This leaves renting as their best option.”
Government policies are making it harder for private landlords to earn from their property. Because of the Section 24, ‘Tenant Tax,’ landlords cannot offset the mortgage interest as an expense and pay tax on the total amount. If the landlord decides to sell the property, any new owner also renting it out is likely to set a higher rent, if only to stay ahead of any changes in the market.
New legislation is not enough
The new Renter’s Rights Bill, currently going through Parliament and due to become law during 2025, will bring in significant improvements for tenants:
- landlords will be required to give valid grounds for ending a tenancy;
- landlords will not be able to take more than one month’s rent as the amount of the deposit;
- tenants will have to give two months’ notice to end a tenancy;
- penalties for violations of the bill (when it becomes law) will be increased from £7,000 to £40,000: this will underscore the importance of complying with the law and practising good management;
- it will be mandatory for landlords to be registered with a new Private Rented Sector (PRS) ombudsman, in order to enhance accountability and tenant rights;
- the PRS ombudsman will enforce the Decent Homes Standard, which sets minimum standards for rental properties.
These new initiatives (new tenancy laws, lowering the deposit permitted, no-fault eviction) are commendable, but the fact remains that the stock of social housing is simply inadequate. The record-high rents due to the housing shortage, high demand, inflation, and rising costs, are putting the rental market under enormous pressure. The issue needs to be addressed more urgently than ever.
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