U.K Tenants Are Renting Longer And Paying More Than Ever Before

With home listings reducing and demand skyrocketing, more UK renters are competing over a shrinking pool of homes for rent. The housing market continues to pose a huge challenge to the government as most renters are either paying more than their budget or downsizing into spaces by compromising on convenience and other factors. Some stats reveal why the housing situation in the UK is alarming.

· The average rent in Greater London has shot up by around 16 percent from last year. This is the highest rate of growth for any region in the country.

· Outside of London, the average private rent has increased to a record-breaking £1,162 per month.

· In the capital, it is a whopping £2,343 per calendar month.

· People looking for places to rent have increased by 20% compared to last year.

· The number of properties available for the same period has decreased by nine%

Rising rents are driving noticeable changes such as a shift in demand for studio flats among renters over one-bedroom properties. Agents claim that this shift is because of financial reasons and also because it is now the only way young renters prefer living in the city. This shift will fuel demand for co-living, the institutional landlords answer to providing smaller spaces to rent, anything from 14 to 20 square meters but at scale with inviting amenities and community spaces so you can live outside the box and co-work from the building too.

Read more about coliving as an emerging product at https://ringley.co.uk/asset_management/coliving

The Scottish government has come to the rescue of renters by passing a law that puts a temporary freeze on private and social rents until March 2023. London’s mayor’s request for powers to freeze the rent and help tenants has not been heeded so far. The latest price hikes reflect the utter chaos in the private rental market. But why are rents surging northwards in the UK?

The answer can be attributed to a string of policy bloopers.

The answer can be attributed to a string of policy bloopers.

• The imposition of section 24, which stops landlords who own rental property in their name, has resulted in many landlords selling their properties.

· Properties available to rent plunged by 49 percent between March 2019 and March 2022.

· 53 percent of buy-to-let properties were permanently removed from the private rental market.

Homeowners renting out their property are exempt from paying capital gains tax (CGT), while landlords now have to pay steeper rates of CGT. The recent string of events has impacted many landlords. It is also apparent that tenants are also severely hit by these changes. The rise in the cost of new mortgages, triggered by the failed mini-budget, is expected to worsen the situation. Potential first-time buyers are forced to step back and wait for the market conditions to stabilise and settle before they make a buying decision.

The Bank of England has pointed to another potential problem. More than two million mortgages will end their fixed term between 2023 and 2024. With rising interest rates, it will simply cost landlords more to refinance then, further complicating the market situation. The ever-worsening cost of living crisis, high inflation, and increasing energy costs are all major problem areas that can break the back of renters. Pay caps and public spending cuts will play their part too. At the current level of demand for rental homes, the U.K. will need approximately 230,000 new ones to deal with the situation.

Meanwhile, the government aims to focus on rebalancing the property market, so there are more homeowners.

Meanwhile, the government aims to focus on rebalancing the property market, so there are more homeowners.

While former Prime Minister Liz Truss wanted a combination of tax cuts and deregulation to encourage developers and would-be developers to build more, the present government still plans to stick to the party’s 2019 campaign promise. The government has upped the target from 240,000 to 300,000 houses a year by 2025. But then announced the target is advisory! Probably because with current market conditions, it is undeliverable. On all accounts, housing is the biggest challenge of this government. While formulating a practical policy for the future is a must, we can expect the calls for government intervention to bring down rental costs to be louder in 2023