Rent increases hit 13-year high as people flock back to cities

Rent increases have soared to a 13-year high as people return to cities – but surging demand is leaving people locked out of housing, trapped in bidding wars and facing homelessness.

The clamour for housing in Manchester, Leeds and Edinburgh city centres has doubled in the three months up until the end of September, according to analysis from property site Zoopla. 

The rise in demand comes as renters return to city centres following the Covid-19 lockdown but find there is no increase in the supply of homes available to rent. As a result, the typical cost of renting a home in the UK, excluding London, is now £809 a month.

The Big Issue has warned that thousands of renters who have racked up arrears during the pandemic are at risk of losing their home and have launched the Stop Mass Homelessness campaign to prevent a homelessness crisis this winter.

Gráinne Gilmore, head of research at Zoopla, said: “Households looking for the flexibility of rental accommodation, especially students and city workers, are back in the market after consecutive lockdowns affected demand levels in major cities.”

Zoopla’s research found the average UK rents outside of London have risen by six per cent in the year between September 2020 and 2021 including a three per cent increase in the last three months alone.

Anya Martin, director of Priced Out, told The Big Issue many making the move back to cities are struggling to find a place to live. 

“The latest rent data is shocking but not surprising. It reflects what PricedOut is seeing on the ground,” said Martin.

“As people return to the cities to work, we are hearing that there are more people looking for rooms than there are rooms available, renters are being pushed into bidding wars, and some are even ending up homeless.

“It’s the culmination of decades of failure to build enough homes in high-demand areas, as well as the stripping of the welfare safety net.”

The property site’s analysts also theorised that renters opting for larger and more expensive properties after being cooped up in their homes during lockdown partially explained the rise.

The south-west of England saw the biggest jump in rental growth at nine per cent with Bristol the city with the largest increase at 8.4 per cent. Other cities saw rent increases way above the five-year average with Nottingham at 8.3 per cent and Glasgow following at 7.2 per cent.

This is unsustainable and can’t go on forever

Alex Sumner of renters union ACORN

London also saw a first increase in prices for 15 months, rising 1.6 per cent in the year to the end of September 2021. Demand for rental properties rose by 50 per cent over the period – just ahead of the UK as a whole where demand was 43 per cent higher than the five-year average. 

Meanwhile, the number of properties on the market and available to rent was also down 43 per cent. On average, rental homes were on the market for just 15 days before tenancies were snapped up.

Zoopla analysts said rising wages meant affordability remained stagnant with wage rises cancelling out rising rents. 

However, rents account for 37 per cent of a single tenant’s monthly income – this is still higher than the 35 per cent of income housing charity Shelter recommends as the maximum level of affordability.

“While many have lost income and even the roofs over their heads during the pandemic, a rental market left unchecked is rampant with profiteering and runaway rents,” said Alex Sumner of renters union ACORN.

“This is leaving people unable to afford housing they could previously and is forcing people to move from the communities they are from. This is unsustainable and can’t go on forever, now is the time to seriously look at the introduction of rent controls to stem the flow of the housing crisis.”

Time will tell whether rising wages can keep pace with rental prices – Zoopla warned rents are set to grow by 4.5 per cent across the UK, excluding London, in 2022 while the English capital will see prices 3.5 per cent higher than pre-pandemic levels. 

Zoopla’s analysis came a day before the Office for National Statistics revealed its own statistics on the cost of renting. Private rental prices grew by 1.5 per cent in England, 1.2 per cent in Wales and 1.6% in Scotland in the 12 months between October 2020 and 2021.

London also lagged behind in the statistics body’s measures – rents in the English capital rose by 0.1 per cent in October, representing the first time prices had increased since April 2021.

Those rises, coupled with rising living costs and energy prices as well as the recent cut to universal credit, are likely to see renters fall into homelessness over the next few months.

The Big Issue’s Stop Mass Homelessness campaign is calling for £360m in rent arrears racked up by renters during the pandemic to be paid off to give tenants a clean slate to deal with rising prices. 

The Westminster government has announced a £65m fund for vulnerable renters who are trapped in arrears, which housing secretary Michael Gove told MPs he “hoped it would be enough” last week. Meanwhile the Scottish government has launched a tenant grant fund and ministers in Wales have also offered loan and grant schemes to help tenants get by.

“We have been hearing from renters who have lost bidding wars for homes, or failed affordability checks, so are being priced out of their areas,” said Dan Wilson Craw, deputy director of Generation Rent.

“The government has to do much more to bring rents down – that means building more homes, including social housing.”