Rents far outstrip inflation and house price growth

Rents far outstrip inflation and house price growth, according to the publication of the latest data by the ONS.

The cost of renting has risen by 8.6% year-on-year according to the ONS – signalling that it’s getting tougher to tenants.

This compares to wage growth of 4.5% and the current inflation rate of 2%.

Rental inflation was highest in London (9.7%) and lowest in the North-East (6.1%), as it typically costs £1,279 to rent in the UK.

Brian Byrnes, head of personal finance at Moneybox, said:

“As a nation of aspiring homeowners, news that rental costs continue to rise is concerning.

“However, with a new government committed to supporting wealth generation across the country, perhaps there is a glimmer of hope for aspiring homeowners in the UK.

“Our industry must start to seriously consider the long-term effects of ever-increasing rental costs.

“We know how these are continuing to eat into renters’ disposable income and impact their ability to build a deposit for a future home.

“While we welcome the new government’s ambition to build 1.5 million new homes, the measures needed to address the housing crisis are many and complex, it remains true that saving a sufficient deposit is one of the biggest challenges many people face, and this is why pragmatic measures are needed now.”

Rents are rising faster than house prices, which rise by 2.4% in England, 1.8% in Wales and 4.3% in Scotland.

Sarah Coles, head of personal finance, Hargreaves Lansdown, said:

“Landlords continue to sell up in the face of higher mortgage costs, tougher tax rules and the likelihood of more stringent legislation.

“Meanwhile, growing tenant numbers make it harder to get hold of a property, even if you’re prepared to pay sky-high prices.

“It’s difficult to see how things will ever get any better.

“For a renter, their greatest hope may be to get onto the property ladder and out of the rental market altogether.

“This is a massive ask at a time when rents are soaking up such a huge proportion of your income.”

Separate research also suggests that tenants are struggling.

The value of tenant arrears across the UK has risen by 15% in just three months – bringing the average to £2,092 in the second quarter of 2024, data from deposit provider Reposit has found.

Ben Twomey, chief executive of tenant campaign group Generation Rent, said:

“While most of the country breathes a sigh of relief over falling inflation, soaring rents mean the single biggest cost for tenants continues to go up much faster than our incomes.

“Landlords can raise the rent as high as they can get away with while using the threat of a no-fault eviction to bully their tenants to into accepting it.

“These figures show that it works for them, with renters being forced into poverty and homelessness as a result.

“We won’t fix the cost of renting crisis unless the government uses its upcoming Renters’ Rights Bill to slam the brakes on the runaway cost of rent.

“We need more homes to be built in the places people want to live, but to protect us in our homes, we also need to be shielded from unaffordable rent rises.

“That means stopping landlords raising rent above either wage growth or inflation, whichever is lower.”

Kindly shared by Property Wire