Asking rents have jumped more than three per cent in the last three months outside of London according to Rightmove.
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The property site said the national average asking rent outside of London is £1,162 per month compared to £2,343 per month in the English capital where the amount tenants are paying has risen 16 per cent in the last year.
It’s a similar story from the Office for National Statistics’ (ONS) 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.
The ONS monthly update found a 3.6 per cent rise across the UK in the 12 months up to September 2022. The highest rises were seen in the East Midlands where annual growth was 4.7 per cent while London saw the lowest at 2.8 per cent.
Zoopla’s annual rental market report painted a bleak picture for tenants in September 2022. The property portal reported that rents had risen 12.3 per cent in 2022, increasing by £115 a month to make an average cost of £1,051.
That was even worse in London where rental growth of 17.8 per cent was recorded – a situation Zoopla described as “unsustainable” as the rental market in the English capital rebounded following a double-digit decline during Covid lockdowns.
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 per cent as of April 2022. The rate of whether housing associations can increase or decrease rent is set annually at one per cent higher than the current CPI inflation rate.
With inflation now over 10 per cent, 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.
Rightmove found the gap between supply and demand has continued to rise in the last year with a 20 per cent increase in households looking for properties while the total number of properties to rent is down almost 10 per cent.
However, every region in Great Britain saw a jump in new properties to rent except London where supply was down by almost a quarter.
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.”
Letting agents Foxtons said almost 30 applicants were competing for each property in London in September.
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 per cent higher than the previous quarter.
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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 with no sign of the supply issue being tackled while renters also face knock-on effects from rising mortgage rates.
Landlords could pass on increased mortgage payments through higher rents while there is likely to be increased competition for rent homes as would-be first-time buyers cannot afford to get on the housing ladder.
Rightmove has already noted a surge in competition for smaller rent homes. There has been a 71 per cent rise in competition for studio flats, the property site found, with four times as many tenants looking for a studio flat as there are available on the market.
Rightmove’s director of property science Tim Bannister said: “It’s a real challenge for renters at the moment, as there are simply not enough homes available to rent to meet the demand from people enquiring.
“We will need a significant addition of homes to come onto the market to even begin to balance the scales.
“Those looking to rent a smaller property in the next few months may find that they face some added competition from would-be first-time buyers, who have had their purchase plans scuppered for now due to the sudden rise in mortgage interest rates, and are now looking to rent.”
Zoopla analysis found that the stock of homes to rent is 46 per cent 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.”