There have been many stories in the press in recent days about the increasing cost of renting a home. Figures vary depending upon which two reference points are compared, with an alarming 20% jump in a month reported in one survey.
That figure is shocking, but it includes the impact of normal seasonal changes in demand. Perhaps a more reliable indicator of the trend comes from the Office for National Statistics (ONS) which reports a 5.3% rise in rents in the year to July.
That figure might look more comforting to tenants, but it’s the largest increase since the ONS started monitoring the cost of renting, and, again, it’s only part of the picture. The headline figures don’t reveal the fact that many landlords haven’t yet increased their rents. The full impact of rising mortgage rates and other cost increases hasn’t filtered through. More increases could well be on the way. For many of those renting – and finding affordability already an issue – this will be unwelcome news.
Sim Sekhon of Propoly, the tenancy progression platform, says that while the cost of borrowing is having an effect, the major driver is the imbalance between supply and demand. That’s something that isn’t likely to improve anytime soon. In recent days, reports have indicated that those just stepping onto the property ladder face higher costs than renters, something that we haven’t seen for some time. As it’s likely to deter first-time buyers, demand for homes to rent will increase.
Sekhon said, ‘We are seeing the effects of ill-considered government policies coming home to roost. Currently landlords are selling up because of proposals in the Renters Reform Bill, which is contracting supply. Moves such as the limited rent increases in Scotland and proposed rent controls in Wales will only exacerbate the shortage. To deliver quality rental properties, landlords have to be able to make fair returns.’
Although the various surveys highlight different details, there is agreement that rents are rising rapidly. The scale of the increase varies across the regions but there is consensus that this is driven by shortage of supply. Requests to view properties coming onto the rental market have reached unprecedented levels. Affordability is likely to restrict the scale of rent increases, but it’s not easy to predict when that might happen.