The number of tenants signing up with a lettings agent to find a new home showed a 'sizeable jump' in July, new figures reveal.
Numbers were up almost 38% annually, with the trend showing 'no signs of slowing down', according to trade body Propertymark. It said 187 prospective tenants registered per branch on average in July this year, compared to 127 a year earlier.
The number of properties available to rent per member branch increased slightly in July to an average of 14. However, this is still below what is needed to keep up with current demand. Propertymark said that with demand up and stock levels down, it is 'no surprise' that the mismatch between supply and demand continued to grow in July.
It said there was an average of 13 new prospective tenants registering per available property during the month. At the same time, 70% of responding agents reported rents increasing month-on-month on average at their branch in July 2023. However, while this remains high, it is down from 74% in the same month a year ago.
Nathan Emerson, of Propertymark, called for the "fundamental problem of undersupply to be urgently addressed and the provision of desperately needed homes in the private rented sector must be adequately incentivised. In the lettings market, we continue to see an alarming disparity in the number of homes available to rent when compared with growing demand from prospective tenants. The number of prospective new tenants is up by 38% in July compared to the same time last year, yet the number of properties available per member branch has risen by only 24% meaning this gap is continuing to widen from already worrying levels. This mismatch in supply and demand is putting pressure on rents with six per cent of tenants per member branch falling into arrears doubling compared to February 2023."
Tenants have faced a crippling rise in rents during the past year.
Separate figures found that rents rose 5.3% in the 12 months to July 2023, according to the Office for National Statistics. It is the largest annual percentage change since these records began in January 2016.
The ONS said the annual rate of rental inflation began to increase in the second half of 2021. In the 12 months to July this year, rental prices in Britain - excluding London - increased 5.2%, up from 5.1% in the 12 months to June 2023.
Meanwhile, rents in London rose at a faster rate, at 5.5% in the 12 months to July this year, up from 5.3% in the 12 months to June 2023. It is the highest annual percentage change since the London data series began in January 2006.
Separate research by Goodlord shows the average cost of rent in England has reached a record £1,367 a month per property, while in London average values have climbed to £1,986 a month. It said prices were being pushed up by students seeking accommodation for the new university term.
Rent is cheaper than mortgage payments for the first time since 2010 – but not everywhere
For the first time in 13 years, it’s now cheaper to rent a home than buy one in many parts of the UK. Property site Zoopla reports that the average UK rent now sits at £1,163 per month, £122 less than the £1,285 average mortgage repayments for first-time buyers with a 15% deposit.
London and the South East are said to be the areas worst-hit by rising mortgage rates, despite the fact rents have also steeply increased in recent months. In areas like Scotland, Northern England, Wales and Northern Ireland, however, renting remains a less expensive option.
According to Moneyfacts, the average two-year fixed-rate mortgage is currently 6.76%, or 6.24% for a five-year fixed deal. This is down to the Bank of England hiking the base rate 14 consecutive times since December 2021, with interest jumping from 0.1% to 5.25% over this period.
UK regions where monthly rent is cheaper
London
Rent: £2,053
Mortgage repayment: £2,546
South East
Rent: £1,254
Mortgage repayment: £1,469
East of England
Rent: £1,111
Mortgage repayment: £1,301
South West
Rent: £1,016
Mortgage repayment: £1,184
East Midlands
Rent: £816
Mortgage repayment: £868
West Midlands
Rent: £852
Mortgage repayment: £890
Figures courtesy of Zoopla, June 2023.
Richard Donnell, head of insights at Zoopla, told the BBC "that for the last decade it had been ‘much cheaper to buy than rent’ due to ‘ultra cheap mortgage rates’, a trend which has reversed for the first time since 2010. In southern England where prices are higher, access to home ownership is most out of reach and rents are high as well."
UK regions where monthly mortgage repayments are cheaper
Wales
Rent: £814
Mortgage repayment: £799
Yorkshire and Humber
Rent: £758
Mortgage repayment: £731
Northern Ireland
Rent: £744
Mortgage repayment: £700
North West
Rent: £795
Mortgage repayment: £736
North East
Rent: £649
Mortgage repayment: £531
Scotland
Rent: £620
Mortgage repayment: £748
Figures courtesy of Zoopla, June 2023.
The company based calculations on the average property price (£263,000) where a first-time buyer had put down a 15% deposit (£39,500), comparing the expected monthly cost on a 30-year term with average rental prices. It also looked at regional differences, finding in London – where the average house price is £522,000 – monthly rent is an estimated £493 less than a mortgage repayment.
Meanwhile, in Scotland – where an average home is valued at £127,000 -Zoopla revealed that rent is still £128 more, while the figures are far closer in Wales and the Midlands. Yet Donnell claims housing unaffordability would remain a ‘real problem for first-time buyers and renters,’ across the country, particularly in Southern England where costs have continued to jump despite stagnating wages.
Recent research by Shelter found that half of working tenants in England would not be able to keep up their payments for more than a month if they lost their job. The majority said they’d had their rent increased over the last year, with more than a third of those surveyed claiming they’re already struggling or behind with their payments as a result.
Rental crisis: one in five tenants has faced eviction in the past year over soaring rents
One in five UK tenants has faced eviction in the past year, with the figure likely to be even higher in London, according to new research. Campaign body Generation Rent said 20% of its supporters nationwide had been told to leave their home in the past 12 months.
The shock situation, understood to be even worse in the capital, comes amid soaring bills and an ever-fiercer battle for available properties. Of more than 1,000 people polled for the latest report, 60% had been asked to pay higher rent in the last year. Nine in 10 of those faced with rises of £50 or less had accepted the hike.
Although there is a formal process that should be followed for price rises, which legally have to be "fair and realistic", many landlords try to use so-called no-fault Section 21 evictions to force them through, warns Generation Rent deputy director Dan Wilson Craw.
The fast-changing process of renting a home
| Requirement | Proportion of renters encountering it in 2017 | Proportion of renters encountering it in 2023 |
| Provide a photo, CV or personal statement to landlord or agent | 9% | 22% |
| Place the highest bid possible | 3% | 21% |
| Attend viewing alongside other househunters | 9% | 39% |
| Sign a tenancy longer than a year | 7% | 12% |
| Provide a guarantor | 25% | 34% |
Source: Generation Rent
"With rents going up so quickly, Section 21 is used to push tenants into accepting rent rises, you are within your rights to negotiate but you might fear eviction" says Wilson Craw.
Generation Rent called on the government to tackle this issue by urgently pushing through the eagerly anticipated Renters Reform Bill. The body also urged ministers to link local housing allowance to market rents and increase housebuilding.
Living in stress
The state of the rental market was laid bare by the report, with 39% of private tenants viewing a property at the same time as others, up from 9% in 2017.
More than one in five respondents had experienced a bidding battle for a rental property, up from 3% six years ago. Meanwhile 22% reported being asked for supporting documents such as photographs or CVs in the latest poll. Wilson Craw said that "the overall impact of the current crisis was not only seen by those hit by huge rent rises but by people pressured into snap decisions and scared to leave an affordable but no-longer-suitable property to fight it out in the wild. People are living in stress and taking a hit to their quality of life," he warned. Commuting further or living in more crowded conditions. London is the worst place for this, we've seen rents go up more quickly and it stands to reason that we see more of the types of practices highlighted in the report."
A government spokesperson said the Renters (Reform) Bill would help tenants challenge unreasonable rate rises.
“We are abolishing Section 21 ‘no fault’ evictions, giving tenants greater security in their homes and making it easier for landlords to get rid of anti-social tenants, we are committed to creating a private rented sector that is fit for the 21st century and works for responsible landlords while strengthening protections for renters.”
RICS says Rents are set for more increases
The cost of renting is set to continue rising sharply thanks to the gap between supply and demand, says RICS chief economist Simon Rubinsohn. The majority (63%) of the surveyors expect rents to go up again in the coming three months, the RICS residential market survey for July says.
This is the highest percentage expecting an increase since the data started being collected in 1999. Rubinsohn said “demand shows no signs of letting up, supply remains constrained and that means rents are likely to continue rising sharply despite the cost of living crisis.”
Private rents rose by 5.1% in the 12 months to June 2023, government data shows.
Tom Bill, head of UK residential research at Knight Frank said “landlords have left the sector in recent years due to extra red tape and costs as they became a politically expedient target for the government. The unintended consequence has been more financial pain for tenants as the supply of rental properties falls and rents rise. Higher mortgage rates have compounded the problem which means the squeeze on tenants won’t vanish in the short term. That said, supply has risen in some areas as owners who have failed to sell for the asking price choose to let out their property until there is more momentum in the sales market.”