According to a recent report from property site Zoopla, the average cost of renting a property in the UK has increased by £3,240 over the past three years. This translates to an average annual cost of £15,240 for renters, which is up about £270 per month since the end of the pandemic.
Rental Growth Outpaces Income Increase
The report highlights that rental growth has surged by 27% compared to a 19% rise in average income over the same period. This means that private renters moving home have faced rents rising faster than earnings over the last three years. Richard Donnell, Executive Director at Zoopla, commented on this trend: "The number of rented homes hasn’t grown since 2016, creating scarcity for renters at a time when demand has boomed on a strong labour market and the rising cost of home ownership."
Regional Variations in Rent Growth
While rent growth is a concern across the UK, there are significant regional variations. Rents are rising fastest in Northern Ireland (10.5%) and the North East (8.7%), which have the lowest average rents of £801 per calendar month (pcm) and £732 pcm respectively.
Rental Growth Expected to Continue
According to Zoopla, rental growth has slowed but is expected to continue putting upward pressure on rents due to an ongoing lack of rental supply. The report notes that average UK rents are expected to rise by 4% by 2025, with large cities and London lagging behind.
London Rental Market: A Tale of Two Cities
In London, rents have risen by 3-6% in cheaper areas of outer London, led by Havering (5.9%) and Barking & Dagenham (5.2%). However, rental growth is less than 1% in inner London areas, such as Tower Hamlets (0.3%), Greenwich (0.5%), and Kensington & Chelsea (0.8%).
Regional Hotspots for Rental Growth
Outside of London, rents are rising fastest in pockets outside major cities, including Rochdale (11.9%), Blackburn (10%), Birkenhead (9%), Burnley (8.9%), and Newcastle (8.7%). Zoopla attributes this trend to "catch-up" rental growth as renters seek out areas with better value for money in and around major cities.
Supply Chain Challenges
The report highlights that the number of homes available remains below pre-pandemic levels in all regions except the East Midlands. This is partly due to private landlords selling off rental homes in recent years due to higher mortgage costs. However, Zoopla notes that the peak of the private landlord sell-off has now passed, and landlords will be waiting for interest rates to decrease before buying more homes, which will increase supply in the rental market.
Government Initiatives to Address Rental Crisis
The report concludes by highlighting the importance of government initiatives aimed at addressing the rental crisis. Labour’s pledge to build 1.5 million new homes over the next five years and loosen planning laws to make it easier for building firms are crucial steps towards easing the pressure on renters.
Key Statistics
- Average cost of renting a property in the UK has increased by £3,240 over the past three years
- Average annual cost of renting is now £15,240
- Rental growth has surged by 27% compared to a 19% rise in average income over the same period
- Rents are rising fastest in Northern Ireland (10.5%) and the North East (8.7%)
- Regional hotspots for rental growth include Rochdale (11.9%), Blackburn (10%), Birkenhead (9%), Burnley (8.9%), and Newcastle (8.7%)
Conclusion
The rise in rent costs is a pressing concern for many renters across the UK. The lack of rental supply, exacerbated by private landlords selling off their properties due to higher mortgage costs, has led to an increase in average rent prices. As the government works towards addressing this crisis through initiatives such as building more homes and loosening planning laws, it remains essential for policymakers to prioritize measures that will alleviate the pressure on renters.
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