- Rents are up 8.3% in a year to £969 a month. It’s the highest they have been in 13 years.
- Monthly rents are up £62 since the start of the pandemic.
- Rent absorbs 37% of income for a single person.
- The return to cities has seen London rents rise 11% in a year.
- The HL Savings and Resilience Barometer, produced with Oxford Economics, has found that renters are far less likely to have been able to build up enough savings, and are less likely to have wiggle room in their budgets.
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown:
“Rent hikes are fanning the flames of the cost-of-living crisis. Tenants have already been badly burned by rising prices, so higher rental costs risk sending their finely balanced budgets up in smoke.
Any renters under the age of 32, won’t have known a time when rents were higher*. It’s the last thing they need when prices are soaring on every side. They’re already having to wrestle with the horrible prospect of a 54% hike in energy prices, a spike in taxes, and increases in the cost of everything from petrol to food. HL research shows renters have far less wiggle room in their budgets already after paying their bills, so these rises are going to be incredibly painful.
Prices have been pushed up by a toxic combination of booming demand and dwindling supply. Rental demand has been climbing for well over a year and a half, partly because the number of renters is growing, and partly as a result of lockdowns persuading more people in shared accommodation to look for a place of their own. The survey found demand up three quarters from the previous three Januarys.
Supply has also been dropping for the past 18 months. Landlords have been squeezed by tax changes, so many are considering selling up while prices are high. Meanwhile, others are switching into the more lucrative short-let market. And because renters are choosing to stay put to avoid the worst of the rent hikes, there’s less churn than usual too. It means supply is below the five-year average for the time of year.
It’s not just pushing prices up, it’s also making it incredibly difficult to find somewhere to live. In some areas, tenants are getting drawn into bidding wars, with the risk that they’re persuaded to commit to more than they can afford. With more price rises expected through 2022, and another round of energy price hikes currently forecast for October, you can’t afford to over-stretch yourself. With rents going through the roof, it may seem like things can’t get worse, but if you sign up to something you can’t afford as a result, you’ll find them getting much worse much faster than you could have imagined.”
*Assumes they started renting at the age of 18, because this is the highest rents have been in 13 years.