Tenants should brace themselves for soaring rents in the New Year, a property expert warns.
The National Association of Property Buyers predicts rents could rise by around four per cent in January because of the five-year record low supply of properties.
Spokesperson Jonathan Rolande says: “This will further add to the unaffordability faced by many tenants. What’s driving this? Well many landlords have suffered recently with changes to legislation, a general rise in agent costs following the tenant fee ban, tax increases and of course a hike in mortgage rates following the failed Truss Budget. But, more notability, the stock of rental properties is now at lowest we’ve seen since 2017. Market forces are therefore pushing up rents.”
He says because of wage stagnation, rent rises are paid for by tenants lowering their expectations and expenditure elsewhere.
“We’ve seen a landlord exodus in recent months, and this only looks set to continue. The recent rental restrictions in Wales, and talk of rent control in London risks ‘spooking’ the market and further reducing the number of landlords” says Rolande.
Commenting on the impact the rental situation is now having on tenants and landlords, he adds: “The ‘us versus them’ aspect of landlord and tenant debate is unhelpful. Usually portrayed as the bad guys, many landlords are under significant pressures with 22 per cent reporting that stress has caused mental health issues. Tenants rightly feel in a vulnerable position. The current situation is not working well.”
According to lettings agency Hamptons average rents in five regions have moved into a new price bracket in recent weeks.
Greater London was the latest, with rents passing £2,100 a month for the first time in October this year. It was driven by rents in inner London reaching a new record high of £2,863 a month in October, £1 a month more than when rents in London’s priciest postcodes previously peaked in October 2019.
It means that rents in every area of the country are now above where they were at the beginning of the pandemic.
Since January 2020, just before the start of the pandemic, rents have risen 19 per cent across Britain. It is the equivalent of an additional £2,351 a year in rent, a significant sum of money to find amid the cost of living crisis.
Hamptons says there had been more rental growth since the beginning of Covid than for at least eight years prior.