The relentless surge in rental prices has once again reached an all-time high, surpassing records dating back to 2016, and this time, the demand from tenants is stronger than ever.
The persistent imbalance between the availability of rental properties and the growing demand for housing has led to an unfortunate consequence: skyrocketing rental costs that are putting additional strain on many households.
According to the latest report from the Office for National Statistics, UK renters have seen their expenses increase by an average of 5.3% in the year leading up to July. These escalating figures come at a time when overall price hikes are squeezing family budgets.
While the inflation rate, a gauge of the changing cost of living, dipped to 6.8% in the year leading to July (down from June’s 7.9%), it remains far above the Bank of England’s target of 2%. The underlying reason for this rent surge is twofold: a surge in tenant demand coupled with landlords scaling back the availability of rental properties.
Such is the intensity of the competition among renters that there are now approximately 20 viewing requests for each available property, as reported by recent data compiled by the BBC through the property portal Rightmove. This number has surged from the six requests seen in the pre-pandemic year of 2019.
The most recent data from the Office for National Statistics (ONS) indicates that the average annual rent increase across the UK accelerated from 5.2% to 5.3% in the past month alone. Notably, London saw a striking 5.5% rise in rents, marking the most substantial upswing since comparable records began in 2006. The West Midlands and Yorkshire and the Humber also recorded an identical annual rent increase of 5.3%.
Welsh tenants experienced an even steeper rise, with average rents shooting up by 6.5% in a year. Scotland wasn’t far behind, reporting an increase of 5.7%. In Northern Ireland, where data collection methods slightly differ, a 9.2% rise was noted in the year leading up to May, although it was lower than a previous peak.
Tom Bill, the head of UK residential research at estate agency Knight Frank, believes that the tenant squeeze is far from over. He pointed out that as the supply of available rental properties continues to decrease and rents climb higher, tenants are bound to experience further financial distress. This challenge is exacerbated by landlords facing elevated mortgage rates.
As official data concerning wages and inflation indicates, experts have begun to predict additional increases in the Bank of England’s benchmark rate. This projection would likely result in continued pressure on both landlords and homeowners due to relatively high mortgage rates.
In tandem with these developments, the average UK house prices have seen a modest annual increase of 1.7%, a decrease from the revised 1.8% uptick noted in May. This slowdown is attributed to the impact of mortgage rate hikes on the housing market.
At Scottish Debt Help, we understand the financial struggles that can arise from escalating rental costs. If you find yourself grappling with persistent debt, we’re here to provide guidance and assistance to help you regain control of your financial situation. Don’t let rising expenses hold you back – reach out to us today for support and advice.