The Office for National Statistics says private rents in England experienced a 6.1% rise in 2023, the sharpest annual increase on record.
Wales saw the highest annual rent increase in Britain at 7.1% with Scotland on 6.2%. London rents escalated by 6.8% last year.
Tom Bill, head of UK residential research at Knight Frank, says “low supply continues to cause financial pain for tenants as it keeps strong upwards pressure on rents. Landlords have been disincentivised by tax and legislative changes in recent years and there is no sign of that changing, particularly as the general election campaign gets underway this year. Political interference has had the unintended consequence of making life tougher for tenants although we expect UK rental value growth to calm down marginally to 5.0% this year as more demand is absorbed.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, adds “for aspiring first-time buyers the sad news is that average rents are still rising, making deposit saving even more difficult, and it’s also making life harder for longer-term tenants too. The usual suspects are at work here – shortage of stock, partly caused by landlords leaving the sector in response to worries over the tax and regulatory regime, while at the same time demand seems unstoppable. However, in the early weeks of 2024, we have noticed an increase in supply which has helped to keep a lid on some of the more ambitious rents and the gap with demand is narrowing."
Long-term population rise to put more pressure on rental market
There will be long term pressure on housing affordability and the private rental sector if demographic forecasts from a range of bodies turn into reality.
A development finance firm - Hank Zarihs Associates - has collated figures from a range of bodies looking at likely population growth, housing supply and pricing trends. It says that the latest UK Census has forecast a seven per cent growth in the UK’s population to some 60 million by 2045 - just over two decades from now.
Meanwhile housebuilding targets - set to need just the current population of the UK - is falling short with the National House Building Council's latest quarterly statistics showing a year-on-year drop of 53% in new registrations with completions down by 15%. Last financial year just 234,000 new homes were built, down by six per cent on figures for 2019-20 and below the government's much-debated 300,000 new homes a year target.
Office of National Statistics data shows that the cost of a home is increasingly more quickly than earnings.
In 2002 the average house price in England was £102,000 and the average salary was £20,739. However, in 2022 - the latest official data available - this climbed to £275,000 with the average salary rising to £33,208. London was the least affordable place to live with the average house price more than trebling to £525,000 in 2022 compared with an average house price of £174,000 back in 2002.
The ONS says this means affordability ratios increasing from 4.92 in 2002 to 8.28 in 2022.
The Hank Zarihs pull-together of these figures comes as the Royal Institution of Chartered Surveyors - in a separate report - shows that immediate tenant demand grew even in December, when traditionally the market slows.
“With landlord instructions remaining scarce, having declined continuously over the past year, a lack of properties available on the lettings market continues to underpin rental prices. Consequently, a net balance of 50% of [lettings agent] respondents expect rents to continue to rise over the near-term, with longer term projections now pointing to a near four per cent increase over the year ahead and for rental growth to average five per cent per annum over the next five years," says the latest RICS market snapshot.
Glut of long-term empty homes slammed as rental shortage continues
New research shows there are 36,210 long-term vacant homes across London - that’s around one in every 100 properties.
The borough in which vacant units make up the largest proportion of local stock is the City of London. While there are just 261 empty properties, they equate to 3.4% of all dwellings.
Southwark is home to the second highest proportion of long-term empty homes, accounting for 2.0% of the borough’s total dwellings stock. Southwark is also home to the highest actual number of vacant properties, where 2,920 homes with an estimated market value of £1.6 billion have been sitting empty for six months or more.
Newham is home to the next largest total number of long-term vacant homes (2,053) with a combined market value of £889.3 million; and in Barnet there are some 1,905 empty units with a combined market value of £1.1 billion.
Lambeth has 1,886 long-term empty units which, based on the borough’s average house price, have a total market value of £1.1 billion.
Kensington & Chelsea completes the top five boroughs with the highest number of long-term empty homes. 1,720 homes across the borough have been vacant for more than six months, and due to the high local house prices, they have the highest combined market value of any borough at a total of £2.3 billion.
The assessment was made by Monta Capital. Its chief executive, Thomas Balashev, says “London’s housing crisis seems to have been going on forever and no government, local or central, seems able to present a viable and practical solution. With the arguments around the capital’s crisis so enduring, how can it still be that so many houses are sitting empty?
More needs to be done to address these vacant dwellings, and it starts with introducing more incentives and initiatives in the planning process. This is the responsibility of the public sector.”