New data from a leading property website has revealed that rents are soaring in the UK right now. In the space of a year, rents have increased by 8.3% – an unwelcome statistic for tenants already struggling with the rising cost of living.
So, what is the average rent in the UK? And what else does the data reveal? Let’s take a look.
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What does the data reveal about the cost of rent?
According to Zoopla, the average cost of rent has increased by 8.3% in a year. This means that rents are now at their highest level since 2009, with the average tenant paying £969 per month. Looking at the past five years, rents are up a hefty 12%.
With these figures in mind, Zoopla suggests that a tenant living alone can now expect to spend 37% of their gross income on rent. This figure was 34% a year ago. However, it should be taken into account that average rents fell slightly last year as a result of the pandemic.
Zoopla’s Gráinne Gilmore commented: “Rents have risen sharply in recent months, amid a backdrop of rising living costs.”
Gilmore also explained how workers returning to their offices has likely had an impact on higher rental costs. She said: “The flooding of rental demand back into city centres thanks to office workers, students and international demand returning to cities means the post-pandemic ‘recalibration’ of the rental market is well underway.”
How will rising rent impact those already struggling with rising bills?
With inflation running at 5.4% and energy and Council Tax bills set to rise in April, many households will already be struggling financially. Average pay rises are expected to be far lower than inflation this year, which is another factor that won’t help those in difficulty.
Even renters who aren’t particularly suffering financially will now find it more challenging to save up to buy a home. Not only have average house prices risen by roughly £25,000 in the space of a year, but savings rates are also pretty derisory compared with previous years.
This means that it is getting harder for renters to save for a mortgage deposit, especially as many will have to allocate more of their income towards paying rent this year.
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Is better news for renters around the corner?
While an 8.3% rent increase will be hard to swallow, renters who have recently signed a tenancy agreement or are lucky enough to have a benevolent landlord may avoid a hike in costs this year.
Zoopla’s Gráinne Gilmore also suggests renters may be in for better news later this year pressure on supply eases. She explains: “The January peak in rental demand will start to ease in the coming months, putting less severe pressure on supply, which will lead to more local market competition, and more modest rental increases.”
Despite this prediction, it’s worth knowing that rent costs are impacted by wage growth and the supply of homes. While wage growth is predicted to be modest this year, the UK continues to have a shortage of homes. For example, just 216,000 new homes were built in the UK in 2020/21. This is significantly below the government’s ambition to build 300,000 new homes a year.
If the government ever hits its target, then we may start to see rents fall. Until then, renters are likely to face higher costs in order to keep a roof over their heads.
