Rent rates are integral to the UK’s private rented sector. For many landlords, setting the right rent is crucial to balancing a successful buy-to-let portfolio, with smaller landlords in particular off-setting mortgage costs and fiscal changes implemented by the government. And for most tenants in today’s economic climate, rent can mean the difference between being able to afford the little things like a meal out with friends or being able to pay for a broken phone.
So what is happening to rents across the UK – and what can we expect to happen over the next few months?
Looking broadly at the UK as a whole, the latest HomeLet Rental Index shows that year-on-year rents have risen by 2%, with the average UK rent now sitting at £919.
Breaking the figures down further shows that the greatest annual increase can be seen in Greater London, where rents in May 2018 are up a staggering 5.6% from the same month in 2017. This equates to an average rise of £84 per household each month.
If we exclude Greater London from the figures average rents in the UK rose 1.3%, putting the average at £763. This would translate to a modest rise of £10 per household across the country. The figures from HomeLet show that rents rose in 11 out of the 12 regions surveyed.
And the squeeze on tenants over the last year has started to show, with data from UK Guarantor Service Housing Hand revealing that in the last year there has been a significant rise in guarantor applications, with students seeing almost a 60% rise in applications and working professional applications up by 156%.
Managing Director of Housing Hand, Jeremy Robinson, said: ‘Unfortunately, a growing number of students and young professionals are struggling to secure rental accommodation, as they cannot provide a guarantor or are failing credit checks.
‘With rising rent prices and deposits, many students can’t afford to put down several months of rent upfront.’
And it seems like for now the rent rises will be here to say with members from the Royal Institution of Chartered Surveyors (RICS) anticipating rises of 3% each year for the next five years, overtaking increases in house prices.
It will be important over the next 12 months for the government to work hand in hand with landlords and tenants. Landlords who have no choice but to raise rents in line with national inflation should be prepared to be flexible when it comes to new tenants, taking into account the troubles they may have faced with an open mind. Additionally, tenants should be prepared to openly discuss with letting agents and landlords the impact of any rent rises, and together formulate a plan.
The private rented sector is still going from strength to strength, but balancing increased revenues with living costs for landlords and tenants is likely to become part of the cost.
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