Rents are rising at highest rate in decades.... What next for the rental market? 🤷♂️
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Rents in the UK are now at the highest point on record, surging beyond wider inflation and leaving renters on low incomes struggling to keep up or find an affordable place to live 🚫
📊 Rental trend and market summary
🔸 Average private rents in the UK increased by 8.7% in the 12 months according to the Office for National Statistics (ONS).
🔸 With UK inflation currently at 3% and wage growth at 5.9%, rents are outstripping both with renters feeling the pain of rising energy bills too
🔸 Analysis from the Joseph Rowntree Foundation (JRF), found rent inflation has been above 8% for the last 18 months
🔸 Tenants are still paying £106 more every month on average than they were a year ago.
🙋♂️ How much is rent in UK?
🔹 Around 4.7 million households use the private rented sector in England with 11 million renters
🔹 The Private Rented Sector is now the second biggest tenure of housing in England behind owner occupiers, making around a fifth of all households in the country
🔹 The most recent ONS statistics show average rents increased 8.8% annually to £1,375 a month in England
🔹 Around 1.2 million private rented households have reported finding it difficult to pay rent, according to the English Housing Survey
🔹 The Westminster government unfroze local housing allowance in April 2024 but tenants on low incomes are still facing a challenge to keep up
🔹 Labour declined to help renters keep up with rising rents when chancellor Rachel Reeves opted not to raise local housing allowance in line with the bottom 30% of market rents
🔹 With housing benefit frozen and universal credit set to rise by 1.7% in April 2025, people on low incomes are being locked out of the Private Rented Sector with many facing homelessness
🔹 Research from Zoopla found tenants are paying £3,240 more to rent each year than during the pandemic in 2021
🔹 A 27% rise in the cost of new lets has seen tenants face an extra £270 a month in rents on average over the last three years while earnings have only grown by 19% over the same period
🙋♀️ Why is UK rent so high?
🔸 There is a housing crisis in the UK because not enough homes have been built by successive governments in the last few decades at a time where social housing stock has been sold off to the private sector through Right to Buy or demolished and not replaced.
The short answer to why rent is so high: it's because there is a shortage of affordable housing 🔻
🔸 An estimate from the National Housing Federation found around 340,000 new homes should be supplied in England each year with 145,000 them to be affordable
🔸 Shelter has called for 90,000 social rent homes to be built each year for the next decade
🔸 The previous Conservative government has previously targeted 300,000 new homes in England – a 2019 manifesto commitment – but failed to hit that mark
🔸 In 2023-24, 221,070 additional homes were recorded in England, including fewer than 200,000 newbuild homes, down 6% on the previous year’s total
🔸 Labour has committed to building 1.5 million homes by 2029, including prioritising social rent homes to ease the demand on the Private Rented Sector in the long-term
🔸 The private rental sector has picked up the slack in recent years and has doubled in size over the last two decades
🙋♂️ Will rent prices go down in 2025?
🔹 Rising rents are having an impact – the latest Ministry of Justice (MoJ) figures show the number of tenants evicted by private landlords continuing to surge
🔹 Just under 3,000 households were evicted from their homes through a no-fault eviction, also known as a Section 21 eviction, from October to December 2024
🔹 That meant the number of people evicted through the courts after receiving a section 21 notice rose by 20% in 2024 when compared to the previous year
🔹 The number of people facing a section 21 eviction, which allows landlords to evict a tenant without giving a reason, hit its highest point since 2016 at the end of 2024
🔹 Rents on new properties are starting to hit the highest point of what tenants can afford, which is seeing rises start to slow but it is a long way from rents starting to fall
🔹 There is reason to think rents could yet rise further
🔹 Zoopla is forecasting annual rent inflation of around 4% in 2025 – the lowest rate for three years
🔹 Meanwhile, the National Residential Landlord Association has continually warned of a landlord exodus ahead of the introduction of the Renters’ Rights Bill driving up prices
If you would like any advice on the rental market, complete the form opposite or email scott.sneath@cavendishproperty.co.uk 📧
📸 Scott Sneath, Director of Operations and Finance at Cavendish Residential 📸
📸 Lead image: Stunning 1 bedroom city centre apartment appointed to highest standard | More details here | £995 per calendar month 📸
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