The average house price in the UK was £288,000 in June, increasing by 1.7% over the past 12 months, the Office for National Statistics (ONS) has reported.
Figures show a resilient housing market
While June 2023’s average UK house price was around £5,000 higher than a year ago, it was still £5,000 below the recent peak recorded last year. The 1.7% rise was also lower than the 1.8% annual house price growth of the previous month.
Average house prices increased over the year by 1.9% to £306,000 in England, by 0.6% to £213,000 in Wales, and by 2.7% to £174,000 in Northern Ireland. Little changed in the house prices in Scotland, which recorded an average of £189,000.
Latest house price data supplied by HM Land Registry, Registers of Scotland, and Land and Property Services Northern Ireland showed that the North East had the highest annual percentage change of all English regions in the 12 months to June at 4.7%, while London saw the lowest at -0.6%.
“Annual house price inflation, measured using final transaction prices, slowed again in June, but the fall was gentler than we have seen in previous months,” said Aimee North, head of housing market indices at the Office for National Statistics.
Meanwhile, in the UK private rental market, rents paid by tenants rose by 5.3% in the 12 months to July 2023, up from 5.2% in the 12 months to June.
During the same period, annual private rental prices increased by 5.2% in England, 6.5% in Wales, and 5.7% in Scotland.
Within England, the highest annual percentage change in private rental prices in the 12 months to July 2023 was in the West Midlands, Yorkshire and the Humber, and London, at 5.5%, while the North East saw the lowest at 4.6%.
“There was another record annual increase for UK rents in the latest month,” North noted. “London rental prices rose steeply to their highest annual rate since records began in 2006.”
Emma Cox, managing director of real estate at Shawbrook, said "July’s modest increase in house prices saw the market yet again defying expectations in the face of fluctuating rates, and a slowdown in activity. For real estate professionals, the current phase could be an opportune time to explore new possibilities. With the property market overall less busy, a reduction in competition from owner occupiers will create a favourable environment for landlords to consider expanding portfolios. With a robust demand in the rental market, landlords might consider diversifying into higher-yield options like houses in multiple occupation, which could in turn contribute to an increase in available properties for rent.”
Nicky Stevenson, managing director at Fine & Country, added "that while house price growth was cooling, the fall in inflation sparked hopes that the economy was turning a corner, and bolstering the chances of the property market experiencing a soft landing. The biggest barrier to sales is the cost of mortgages, but competition for borrowers has seen lenders drop rates in recent days, which may trigger another flurry of activity,” Stevenson said. “The Bank of England may also be nearing the point where it presses pause on further base rate hikes, which would bring greater stability to mortgages and, in turn, promote more confidence in the property market. The resilience of the housing market can partly be attributed to a pool of motivated buyers who continue to bid for reasonably priced properties.”
NRLA: Rental supply crisis shows no signs of ending
Landlords twice as likely to sell property than buy. As tenant demand rose and the supply of rental properties became limited, rents increased by 5.3% in July, according to the Office for National Statistics. It is highly likely that these rental prices will continue to soar with landlords not expecting to see the rental supply crisis end soon.
According to a new study conducted by research consultancy BVA-BDRC and commissioned by the National Residential Landlords Association (NRLA), private landlords are more than twice as likely to sell properties than they are to purchase them. Findings of the research revealed that 12% of landlords in England and Wales sold properties in the second quarter of this year while only 5% purchased properties during this same period.
The study also showed that 37% of landlords planned to cut the number of properties they let over the coming year, meaning that the proportion of landlords who planned to downsize their portfolio was at an all-time high. Only 8% said they planned to increase the number of properties they let in the market.
Meanwhile, two thirds, or 67%, of landlords surveyed reported that tenant demand had increased in the second quarter of the year – another all-time high. Amid growing mortgage costs and ongoing uncertainty about proposed reforms for the private rented sector, the NRLA warns that the supply crisis will only deepen without urgent action from the government.
The landlord association continues to call for ministers to scrap tax changes which, according to them, deliberately seek to deter landlords from investing in desperately needed private rented accommodation. This includes the 3% stamp duty levy on the purchase of homes to rent out, as well as the decision to restrict mortgage interest relief on long-term homes to rent.
Ben Beadle, chief executive of the National Residential Landlords Association said “while the Chancellor has developed a mortgage charter to help homeowners, the lack of assistance for renters and their landlords is clear for all to see. Households renting privately are facing the full force of the supply crisis, and change is needed now to prevent the situation from worsening over the next 12 months. The government must reverse its damaging tax hikes on the sector. It is frankly absurd to have a tax system that punishes landlords for providing the homes tenants so desperately need, while favouring holiday lets.”
In a response to a landlord petition earlier this year, the UK government said that while it recognised that the private rented sector played an important role in the UK housing market and economy, it also had a responsibility to make sure that the tax system was fair.
“The Government understands that people, including those who rent property, are worried about the cost-of-living challenges ahead – that is why decisive action has been taken to support households across the UK, while remaining fiscally responsible,” part of the statement from the HM Treasury read.
Squeeze on tenants not ending any time soon - top agency
A leading agency says the squeeze on tenants facing high rent rises is not going to end anytime soon. The comment - from Knight Frank research guru Tom Bill - follows news that rents rose by 5.3% on average in the year to July, according to the Office for National Statistics. High demand from tenants at the same time as landlords reducing the number of available properties is a key reason behind the rent increase.
There was a 5.5% increase in rents in London, which was the only region where house prices had fallen; this was the sharpest increase in rent since comparable records began for London in 2006. The same annual rent rise was recorded in the West Midlands as well as Yorkshire and the Humber. There were even bigger rises for tenants in Wales, where the average was up 6.5% annually while in Scotland the increase was 5.7%.
In Northern Ireland there was a 9.2% increase in the year to May - actually below a previous peak high.
Knight Frank’s Tom Bill says "the squeeze on tenants will not end any time soon. Landlords have left the sector in recent years due to extra red tape and tax as they became a politically expedient target for politicians. The unintended consequence has been more financial pain for tenants as the supply of rental property falls and rents rise. It is an imbalance compounded by the fact landlords now face higher mortgage rates.”
Propertymark chief executive Nathan Emerson adds “there is a huge disparity in the number of properties available to rent compared to the continuously growing number of renters looking for a home, ultimately continuing to put pressure on rent prices. UK governments need to urgently address the problem and look to adequately incentivise the provision of desperately needed homes rather than forcing landlords out of the private rented sector with unfair regulatory and financial hurdles.”
The cheapest and dearest places to rent in England
Professional cleaning firm Prompt Cleaners has created a league table of regions and local authorities where renting is cheapest and dearest.
The firm looked at average rents per area compared to average salaries for those in employment.
Having a mean monthly rent of £597 and monthly salaries averaging £2,215.20, the North East is the most affordable region in England in terms of renting.
However, there are low cost renting locations outside of this region too.
Hyndburn, located in the North West of England, proves the assertion that salary size has little to do with the affordability of rent. With average monthly pay estimated at £2,349.60, the district ranks 203rd in the Employee Earnings in the UK dataset published by the ONS. However, due to relatively low mean rent levels (£509 per month), local employees spend just 21.66% of their salaries on rent - the lowest percentage in England.
Three more localities in the North West are among the top 10 most affordable places to rent a home - Copeland (2nd), Allerdale (3rd) and Burnley (5th). The portion of the monthly salaries that local employees set aside for rent is 22.1, 22.9, and 23.6% respectively.
The second English region with the most affordable residential rental prices is Yorkshire and the Humber. With a £538 mean monthly rent and salaries averaging £2,217.2 per month, Barnsley town ranks 9th in terms of rent affordability.
The top 10 areas where renting a home is most cost-effective are rounded up by Hartlepool (6th), Darlington (7th) and County Durham (10th). The employees in these three North Eastern localities spend 23.68, 23.72, and 24.4% of their average monthly earnings on rent respectively.
At the other end of the scale, predictably, eight out of the 10 areas with the highest salary percentage spent on rent are in and around London. The other two are Oxford (58%) and Bristol (61.4%).
Westminster is the area in England where the highest percentage of salary (79.36%) is needed to cover the average monthly rent - £3,036 vs £3,825.6. According to the Office of National Statistics, the mean monthly pay in 322 of the 355 areas in the Employee Earnings in the UK dataset cannot cover the average rental prices in Westminster.
Other areas in the London region where renting is particularly less advantageous are Camden, Hammersmith & Fulham, Inner London, Southwark, Merton, Hackney, and Kensington and Chelsea. The portion of the mean monthly salaries that local employees need to set aside for rent varies between 59.5 and 67.5%.
Here’s the regional league table:
North East - 26.95%
North West - 31.34%
Yorkshire and Humber - 31.21%
West Midlands - 32.6%
East Midlands - 31.07%
East of England - 38.14%
South and West - 41.4%
South of England and Home Counties - 41.25%
Greater London - 56.16%
UK’s rental shame: Tenants paying four times as much of income as homeowners on housing
Renters are now spending nearly four times as much of their income on housing as homeowners – in the latest sign of Britain’s worsening housing crisis. Millions of people are now spending at least half their monthly salary on rent, with the average private renter giving more than a third of their wages to a landlord.
The revelation is the latest to expose the scale of the growing emergency gripping the UK.
Last month, an Independent investigation found that the majority of local councils had failed to build a single home in the past five years despite 1.2 million people on waiting lists and this newspaper branded the government’s homes plan “too little, too late” after housing secretary Michael Gove said a target to build 300,000 a year was never mandatory.
Labour said the figures showed renters were being hit by a double whammy of rising rental costs and the ever-increasing cost of buying a house, making home ownership an increasingly distant prospect. The government says it is bringing forward reforms to renting, and already spends billions on housing support – but charities say a mass housebuilding programme is needed, along with limits on rent rises and more support for those hit hardest.
A new expert analysis by the respected Resolution Foundation shows that renters spent 34% of their incomes on housing costs in 2021-22, compared to 9% for mortgage holders.
Cara Pacitti, senior economist at the think tank, said "private renting remained the most expensive type of housing despite rises in costs for homeowners. Private renting remains the most expensive of all tenure types, despite continuing issues of quality and security. Average floor space per renter has fallen by a fifth over the past 20 years, while almost a quarter of private rental homes failed to meet the Decent Homes Standard in 2021-22, posing significant challenges to renters’ living standards.”
Private renters already pay the highest housing costs out of anyone, and they are the last group of people who can afford to absorb financial shocks. The government’s focus needs to be on helping tenants to weather this storm.
Polly Neate, chief executive of Shelter
Worryingly, evidence from charities working on the front line of the crisis shows the situation for renters is worsening faster than official statistics can keep track of.
Call handlers working for the housing charity Shelter told The Independent they were now dealing with people facing “crazy” rent rises as high as 50% of what they were previously paying – while new tenants are forced by letting agents to take part in a bidding war for a roof over their head.
Citizens Advice, meanwhile, provided shocking figures showing a 200% spike in the number of people seeking assistance to help battle evictions for non-payment of rent, rising from 300 cases in 2019 to 900 cases in 2023.
At the beginning of 2019, private renters who approached the charity were paying an average of £498 in housing costs, but that had risen to £631 by the start of this year. Shelter’s most recent quarterly surveys of private renters found that 33% (2.7 million people) are spending at least half their income on rent.
The figures, from the start of the year, also show that 48% of renters have seen their housing costs increase in the past year and 22% now struggle to pay it.
“We’ve been inundated with distressing calls from families that have been grappling with steep rent rises,” said Nadeem Khan, an adviser at Shelter’s helpline – adding that he was regularly seeing people cutting back on essentials to pay rent. “I spoke to someone last week, a single mother with two young kids, who told us that the landlord has raised their rent by about 30%. She’s in tears when she’s telling me that her tight budget can’t keep up. She told the landlord – and he served her a no-fault eviction notice.”
The helpline also regularly hears from people who are being forced to leave their local areas because they can no longer afford the rents there, he said.
“Just yesterday I spoke to an elderly gentleman, which was particularly heart-wrenching because he’s lived in this neighbourhood for decades.
“The landlord has increased the rent: he’s told me he has to make a choice between putting a decent meal on the table or paying for the roof over his head – but he can only keep it up so long. So he’s now having to face this grim reality of leaving this place he’s called home for most of his life.”
The government pledged under prime minister Theresa May to improve conditions for renters by banning no-fault evictions – but years later the legislation, the Renters (Reform) Bill, is still making slow progress through parliament.
Ministers have since scaled back their housing targets for local authorities and ditched proposals for planning reform aimed at getting more homes built. They have also ruled out introducing any controls on how fast rents can rise, as are common in other European countries.
In contrast, the government has unveiled a package of measures to help mortgage holders with their costs. Banks have agreed to put a one-year grace period on repossessions and let homeowners reduce payments by either switching to interest-only mortgages for six months, or lengthening the term of their mortgage.
Labour’s shadow housing secretary Lisa Nandy told The Independent “renters are being hit by a brutal double whammy as the housing crisis goes from bad to worse. Rents are going up – alongside other costs like energy bills and food – which is reducing the amount that can be saved for a deposit, and at the same time the cost of buying a house keeps rising. All this is making the dream of homeownership ever more distant. We will build more houses, support first-time buyers with a mortgage insurance scheme, and bring in a powerful new Renters’ Charter to make renting fairer, more secure and more affordable.”
Polly Neate, chief executive of Shelter said "the increased demand for private rentals driven by years of government failure to invest in genuinely affordable social homes” was driving up rents. The government’s focus needs to be on helping tenants to weather this storm. It must end the four-year freeze on housing benefit, but to escape the storm clouds for good, the government needs to build a lot more social housing with rents tied to local incomes, so we are less reliant on private renting in the future."
Dame Clare Moriarty, chief executive of Citizens Advice, said "many people could not cover their essential bills and risked “being sucked into a spiral of debt. Our latest analysis is a sobering reminder that, despite cutting their spending back to the absolute minimum, too many people are simply living on empty. The government must look at ways of preventing mortgage holders and renters from falling further into the abyss."
Ben Twomey, chief executive of campaign group Generation Rent, urged the government to block unaffordable rent increases and build large amounts of social housing. “A cost of renting crisis is forcing tenants to bear the worst of the economic turmoil right now. While many mortgage holders have yet to see their monthly payments increase, most private renters have already faced a rent hike this past year,” he said.
“The government’s response to this needs to put tenants first: prevent unaffordable rent increases and protect tenants in their homes if their landlord needs to sell. Tenants relying on benefits need their housing support raised to cover what rents actually cost, and, to meet demand, we need a massive programme of building, particularly of social housing.”
A spokesperson for the government’s housing and levelling-up department said “we recognise people are facing pressures in the private rented sector, which is why we introduced the Renters (Reform Bill), delivering a fairer deal for renters and empowering them to challenge unjustified rent increases. Individuals struggling to pay their rent may be eligible for a range of financial support, and the most vulnerable households can apply for help with the cost of essentials, including energy bills. We have provided £2.5bn in funding for this since October 2021 and extended the Household Support Fund in England to 31 March 2024.”