That’s according to two studies published this week that reveal the challenges facing renters today.
The Office for National Statistics’ (ONS’) Economic activity and social change in the UK, real-time indicators data reveals a collapse in renter affordability.
It showed that tenants now spend 28.8% of their income on rent, up from 26.6% a year ago and 25% five years ago.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “There’s no let-up in the squeeze on renters. They’re now spending a far higher percentage of their income on keeping a roof over their head, and the proportion of their income they’re having to hand to the landlord is rising faster than at any other time in the past five years.
“Landlords are continuing to sell up – concerned about higher costs from more regulation and bigger mortgage payments. It means more tenants chasing dwindling numbers of properties, so they’re having to pay through the nose to find a place to live.”
Supply and demand mismatch
A study from Zoopla, also published this week, echoed the stark situation for UK renters.
It found that 21 people are competing for every rental property, twice the pre-pandemic average, with supply remaining a huge problem for renters. This mismatch between supply and demand is pushing rents up higher.
The number of homes for rent are still 24% below pre-pandemic average, said Zoopla, an issue that has been “compounded by stalled new investment by private landlords”.
This is due to high mortgage rates alongside regulatory concerns. Plus, mooted capital gains tax (CGT) changes in the Autumn Budget could exacerbate the problem if it prompts more landlords to sell up.
Richard Donnell, executive director at Zoopla said: “The slowdown in rental inflation is being drawn out by a lack of homes for rent and continued strong demand, driven by the unaffordability of homeownership. Rental inflation is slowing in some major cities where rents are high, but they are still increasing quickly in more affordable areas.
“Any new policy or tax changes that result in a reduction in supply will simply push rents higher, hitting low-incomes renters hardest.”
Sharp rent rises
Zoopla said that average rents stand at £1,245 per month in July 2024, £63 per month higher than a year ago.
Rents rose most quickly in Wolverhampton (12%), Oldham (11%), Darlington (10%) and Walsall (10%), all areas close to large cities with higher renters or well-connected for transport and access to cities further afield.
Related: Section 21 ban and once-a-year rent increases proposed in Renters’ Rights Bill
