According to the Office for National Statistics (ONS), 40% of persons in the UK are currently having trouble making their mortgage or rent payments. This number represents a huge increase from the 30% of the previous year. The average rent has increased to £1,278 outside of London and a startling £2,627 inside the city. High mortgage rates, rising tenant demand, and a decline in the supply of rental homes as a result of landlords selling up are some of the driving forces behind this increase. Tenants have had to give more than the asking amount to acquire accommodation due to the competitive market.
A significant number of adults, approximately 40%, are currently facing difficulties in meeting their rental or mortgage payments, according to recent data from the Office for National Statistics (ONS). This figure marks a worrying increase from the previous year, where 30% reported struggling with their housing payments.
The ONS figures further unveiled that the average rent outside of London has surged to £1,278 per month. Within the capital, the cost has soared even higher, reaching a staggering £2,627 per month. These statistics reveal a substantial 8.9% increase in average rent prices since September 2022, and a 1.38% rise since August of this year.
Behind these escalating rent prices are various factors that have created additional financial pressures for landlords. High mortgage rates and an increase in tenant demand, combined with a decrease in the supply of available rental properties due to landlords selling their investments, have been some of the main drivers of this sudden spike in rental costs. The reduction in rental supply has also led to a competitive market, with potential tenants often offering to pay above the asking price to secure housing.
For example, recent data from Rightmove indicates that the average rental property receives approximately 25 enquiries from potential tenants, a stark contrast to the pre-pandemic era, when there were only around eight inquiries on average.
London, accounting for nearly one-third of the UK's rental expenditure, reported a 5.9% increase in private rental prices over the 12 months leading up to August 2023. This marked the highest annual growth rate since the data series for London began in January 2006.
In response to this housing crisis, Angela Rayner, during the Labour party conference, pledged to strengthen housing reforms and accelerate measures outlined in the frequently delayed Renters Reform Bill. The bill proposes the abolition of assured shorthold tenancies (ASTs), which would effectively eliminate Section 21 notices and 'no-fault' evictions, providing tenants with at least two months' notice of rent increases.
However, it is worth noting that the Conservatives did not provide specific details related to housing reform, social rent, or home-ownership during their conference earlier in the month. Despite this, the government has indicated its intention to pass the Renters Reform Bill into law during this parliamentary term, which is currently expected to run until January 2025.
The implications of this surge in rent costs are widespread. For tenants, it means facing the ever-increasing challenge of meeting their housing expenses, while for landlords, it implies increasing financial pressures due to high mortgage rates and an increasingly competitive market. With no immediate solution in sight, the housing market is likely to remain a key issue in the foreseeable future, both in London and across the UK as a whole.
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