Homelessness charity Shelter is aiding renters facing steep rent hikes, some up to 50%, due to factors like limited housebuilding and tax policy changes affecting landlords. Families are grappling with rising costs, with the lack of new housing contributing to the problem. The removal of mortgage tax relief and elevated taxes have forced landlords to increase rents for profitability. Additionally, tenants could bear the brunt of escalating mortgage and energy costs through higher rent charges. The situation highlights the challenges renters face in the UK housing market, where affordability and living standards are compromised.
The research from the Resolution Foundation indicates that renters in the UK are using nearly four times the portion of their earnings for housing compared to homeowners. On average, renters allocate around 34% of their income towards rent, whereas mortgage holders only spend 9%. Despite concerns about quality and security, private renting continues to be the costliest housing option among different tenures, as stated by Cara Pacitti, a senior economist at the think tank.
Over the last two decades, the average amount of living space per renter has decreased by 20%. Additionally, during the period of 2021-22, nearly 25% of privately rented homes did not meet the Decent Homes Standard, presenting substantial obstacles to the living conditions of renters. Shelter, a homelessness charity, is assisting renters who are experiencing significant rent increases, some as high as 50%, as reported by The Independent.
The sharp rises are often attributed to a shortage of new housing construction, compounded by landlords citing increased taxes due to policies such as the removal of mortgage tax relief. These factors compel landlords to raise rents to generate profit or cover costs. The escalation In mortgage and energy expenses is also likely to impact tenants through increased rent charges.
According to the ONS, individuals who rent are nearly five times more prone to facing financial difficulties compared to those who outright own their homes. By May 2023, roughly 40% of renters expressed challenges in affording their rent, with nearly half of renters and mortgage holders acknowledging recent payment increases within six months.
The Office for National Statistics reported a 4.8% annual increase in private rental prices for UK tenants leading up to February 2023. Despite a form of rent controls, Scotland experienced the highest rises at 5.2%, compared to 4.7% in England and 4.8% in Wales. Outside of London, Rightmove observed an almost 10% surge in asking rents during 2022.
According to Rightmove, average requested rents in London have exceeded £2,500 monthly for the first time. Zoopla observed a 10.4% surge in rents for newly leased properties in the year until June 2023. This marks the 15th consecutive month with double-digit rental inflation, albeit a slight decrease from the 12.3% peak in mid-2022. This translates to an average annual rise of £2,820 in rental expenses for tenants over the last five years. The rise in rental costs is not restricted to the private rental sector; tenants in social housing experienced a 7% increase in rents by April 2023.
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