Rents Continue to Surge Across the UK

Rents in the UK continue to rise, with no signs of relief for households. According to the Office for National Statistics, the median rent in England was approximately £800 between October 2021 and September 2022. While the Renters Reform Bill aims to protect renters' rights, it is crucial that action is taken to control or manage the rising rents.

The Demand for New Rental Homes

There is a need for nearly 230,000 new rental homes if demand continues at its current pace. This shortage of new housing has been a persistent issue for years, and the need for more rental properties is growing. The increasing cost of home rentals has forced many people to rent for longer to avoid being caught in a difficult situation as new homes are hard to find within their budget.

The Impact of Rising Rents on Private Landlords and Yields

Despite rising rents, many factors impact the private rented sector, affecting rental home stocks. Although high rents might seem like a positive for investors, deeper analysis reveals that yields in the sector are often much lower than expected. The situation is compounded by increased interest rates, rising repair and maintenance costs, and new legislative pressures. The Renters Reform White Paper signals even more changes ahead, creating uncertainty in the rental market.

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Rents Rise Across the UK and Social Housing

Rents in the private rental sector have been rising steadily. The Office for National Statistics reported a 4.7% increase in private rental prices in the year leading up to February 2023. Rents are rising not just in the private sector, but also in social housing. The Social Housing Action Campaign has called for a rent and servicechargesorted.co.uk/blogs/digital-solution-can-improve-the-whole-process-by-making-it-faster-and-more-transparent'>service charge freeze for 2023/24. The Government intervened with a rent cap, limiting increases to 7% instead of the expected 11%.

Why UK Rents Remain High

The primary reason for high rents in the UK is the shortage of affordable housing. Successive governments have struggled to build enough homes to meet demand. The issue has been worsened by the sale of social housing stock through the Right to Buy program, with some homes demolished and not replaced.

What is Expected in the Short Term for the Rental Market?

Rising rents are affecting tenants across the UK. Data from the Ministry of Justice (MoJ) reveals that private landlords are evicting more tenants than ever before due to rent arrears. Between October and December 2022, there were 5,409 landlord possessions, almost double the number in the same period of 2021. With no signs of the Government addressing supply issues, rents are likely to continue to rise, and many landlords may sell their properties ahead of incoming rent reforms, potentially further reducing supply.