The Rent Trap: Why Are Rents Still Rising So High and So Fast?

Inflation may be down, but for millions of renters in the UK, the cost of living is still rising at an alarming rate. According to the latest data from the Office for National Statistics (ONS), private rents rose by 8.6% across England between July 2023 and 2024, with an average increase of £104 per month. In London, the situation is even more dire, with private rents rising by 9.7% and an average increase of £186 per month.

Rising rents are causing financial strain for many renters

But why are rents still rising so high and so fast? The answer lies in a combination of factors, including a supply and demand imbalance, landlords passing on mortgage costs, renters overstretching themselves, and increased regulation of landlords.

Supply and Demand Imbalance

One of the main reasons for rising rents is the chronic shortage of homes available to rent. According to research from Savill’s and the London School of Economics (LSE), the number of homes listed for rent across the country has fallen by 33%. This has led to a situation where homes are being snapped up quickly, and renters are being forced to pay higher prices.

The shortage of homes for rent is driving up prices

Landlords Passing on Mortgage Costs

Another factor contributing to rising rents is the increase in mortgage costs for landlords. Since the pandemic, average mortgage rates have almost doubled, and some landlords are passing on these costs to their tenants.

Renters Overstretching Themselves

Renters are also contributing to the problem by overstretching themselves to pay high rents. According to Rachelle Earwaker, a senior economist at the Joseph Rowntree Foundation (JRF), private renting doesn’t function like other consumer markets. Housing is an essential service, and renters often spend more than is deemed affordable on rent to secure a home.

Renters are struggling to make ends meet due to high rents

Increased Regulation of Landlords

Finally, increased regulation of landlords is also contributing to rising rents. The new Labour Government’s Renters’ Rights Bill will include regulation requiring homes that are rented out to have an Energy Performance Certificate (EPC) rating of C or higher from 2025. While this is a positive step for renters, it may also lead to increased costs for landlords, which could be passed on to tenants.

Landlords are facing increased regulation to improve energy efficiency

The truth is that rent inflation can probably be explained by a combination of all of these factors. Regardless of the reason, one thing is clear: renters are being forced to make long-term financial decisions that could harm their stability in the future.

Rent inflation is causing financial strain for many renters

So, what can be done to address the issue of rising rents? The answer lies in a combination of short-term and long-term solutions. In the short term, the government could provide support for renters who are struggling to make ends meet. This could include measures such as rent subsidies or assistance with finding affordable housing.

In the long term, the government needs to address the chronic shortage of homes available to rent. This could involve investing in new housing developments, as well as encouraging landlords to rent out their properties at affordable prices.

The government needs to invest in new housing developments

Ultimately, the issue of rising rents is complex and multifaceted. However, by understanding the underlying causes and working together to address them, we can create a more sustainable and affordable housing market for all.

Creating a more sustainable and affordable housing market is key