More than half of rents in the PRS have risen in the last year

More than half of rents in the PRS have risen in the last year

0:05 AM, 29th March 2023, About A year ago 10

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“Runaway rents” are crushing the finances of tenants, according to Hargreaves Lansdown.

A report by the Office for National Statistics (ONS) on changes in the PRS from February 2022 to February 2023 has revealed that 51% of properties surveyed had seen a rent increase.

The average hike was 10% – up from 7% a year earlier. In London this was 12% and in the North West, 11%.

‘More than half of tenants have seen their rents hiked in the past year’

Sarah Coles, the head of personal finance at Hargreaves Lansdown said: “Runaway rents are crushing the finances of those trapped in increasingly expensive homes.

“More than half of tenants have seen their rents hiked in the past year, and on average they’re up 10%.”

She added: “When this is added to a hoard of price hikes bearing down on renters – from energy to food and even tax, it’s no wonder that they face such huge challenges to make ends meet – let alone get onto the property ladder.”

For every age category, according to the government’s Family Resources Survey, the proportion of private sector renting in 2021 to 2022 was greater than or equal to the proportion in 2011 to 2012.

It shows that 35–44-year-olds were the hardest hit with the increase in the proportion of those renting rising from 19% to 26%.

Ms Coles added: “Runaway rents hit hard, because while the Family Resources Survey showed that the average rent is the same as the average mortgage.

“But at £150 a week, it makes up a much higher proportion of the income of renters because they tend to be on lower wages.”

In the Hargreaves Lansdown Savings and Resilience barometer survey, 58% of renters have poor or very poor financial resilience – compared to 18% of those with a mortgage and 11% of those who own outright.

‘67% of rents in London rising on average 12%’

Ms Coles added: “The figures in London are particularly painful, with 67% of rents rising on average 12%. Given that private renting is far more common in London – at 29% compared to an average of 19% – the impact is felt even more widely.”

In the South-East 62% of PRS properties saw an increase in rent, while in the South-West this was 53%.


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Comments

Rod

11:29 AM, 29th March 2023, About A year ago

The joy of statistics is that they can be easily be used to prove or disprove something, simply by selecting a specific time period and by failing to note external circumstances.

In this case, interest rates had risen 3,000% (see what I did there) from 0.1% to 3%.
In addition, this covers the first 12 months since covid, with the return to a normal open market, after 18+ months of government intervention and tenants abandoning cities.
Add to that the impact of S24 on tax bills, the impact of inflation on RMI (repairs, maintenance and improvements) and the growth of licencing schemes on landlord overheads.

All that, and I haven't mentioned the fundamental issue of falling supply (driven by a mix of landlords either selling up or switching to holiday lets) at a time when demand has returned, post covid and Brexit leavers, with net migration into the UK of 1/2 million in 2022.

Unlike the social rental market, with its defined indexed rent increases, the PRS is market driven and will occasionally need to reflect that by increasing rents above the long term average, or even reduce them if conditions require it.

AT the end of the day, property is a long term business, where landlords seek to find reliable long term tenants, which means that they cannot charge unsustainable rents without risking high tenant turn-over and associated admin and other costs.

Paul Essex

13:00 PM, 29th March 2023, About A year ago

That's great news for tenants as:-
100% of fuel costs increased
100% of food costs increased
100% of building costs increased
100% of insurance costs increased
100% of council tax increased
100% of ..............

But less than 100% of rents, should be a positive news story.

northern landlord

13:21 PM, 29th March 2023, About A year ago

The word “Hike” is very emotive as it implies an unfair rise, as does the term “runaway rents”. According to the article 51%, or in journalistic terms “over half” of rents have not been “hiked” at all so have not “runaway” either. Additionally the average rise for those rents “Hiked” was 10% while inflation is officially 10 or 11% so rising in line with inflation.
As it’s about 50/50 in numbers between “hiked” and no rent rise you could say that the average rent rise has been 5%. But does the article say “Landlords are helping tenants by keeping the average rent rise at half the rate of inflation”? Of course not, that could be interpreted as being pro-landlord and that would never do. What about mortgage payments, are they not being hiked as well?

Rod

13:41 PM, 29th March 2023, About A year ago

The February ONS report on rents in the PRS says

Private rental prices paid by tenants in the UK rose by 4.7% in the 12 months to February 2023, up from 4.4% in the 12 months to January 2023.

Annual private rental prices increased by 4.5% in England, 4.2% in Wales and 4.9% in Scotland in the 12 months to February 2023.

Within England, the East Midlands saw the highest annual percentage change in private rental prices in the 12 months to February 2023 (4.9%), while the West Midlands saw the lowest (4.0%).

London's annual percentage change in private rental prices was 4.6% in the 12 months to February 2023.

https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/indexofprivatehousingrentalprices/february2023

NewYorkie

13:43 PM, 29th March 2023, About A year ago

If my tenant had my mortgage, she would have seen it increase 110% in 12 months. Instead, I've given her a below inflation 7% rent rise.

northern landlord

13:59 PM, 29th March 2023, About A year ago

Reply to the comment left by Rod at 29/03/2023 - 13:41
Rod, case proven. Landlords are not as evil as we are painted as being but why does nobody ever show us in a positive light?.

northern landlord

14:03 PM, 29th March 2023, About A year ago

Reply to the comment left by NewYorkie at 29/03/2023 - 13:43
If the 7% rise in rent doesn’t at least cover the increase in mortgage you are “losing out to help out” to paraphrase Rishi. Hopefully your tenant appreciates your actions. In my experience probably not she just sees a rent rise.

NewYorkie

14:17 PM, 29th March 2023, About A year ago

Reply to the comment left by northern landlord at 29/03/2023 - 14:03
Definitely losing out, to help out, and yes, she doesn't appreciate it.

It's not sustainable.

Mick Roberts

14:19 PM, 29th March 2023, About A year ago

Reply to the comment left by Rod at 29/03/2023 - 11:29
Ha ha brilliant:
In this case, interest rates had risen 3,000% (see what I did there) from 0.1% to 3%.

TheBiggerPicture

15:43 PM, 29th March 2023, About A year ago

Reply to the comment left by northern landlord at 29/03/2023 - 13:59
I do wonder that.
Is it because there are perceived strong and perceived weak.

Because you belong to a group that is perceived to be strong, it's ok to be hammered?
Or even worse, need to be hammered?

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