November 22, 2024
£100 a month cost of living property bombshell for UK households | Personal Finance | Finance #UKFinance

£100 a month cost of living property bombshell for UK households | Personal Finance | Finance #UKFinance

CashNews.co

New figures have revealed a £100 property bombshell that is hitting people in the pocket. Rent rises continue to outpace increases in wages as tenants remain in the grip of a cost of living squeeze.

The average increase across the UK was 8.4 percent in the year to August, taking the figure up by £100 a month to £1,286, according fo the Office for National Statistics (ONS).

This is significantly ahead of the 5.1 percent rise in wages and comes against the background of warnings that changes in the law around rental properties planned by the new government threaten to cause a lot of landlords to sell up.

The changes, designed to offer a better deal to renters, include a ban on no fault evictions and rules requiring landlords to spend money to improve the energy efficiency of their properties and tackle problems such as mould.

The ONS said average rents increased to £1,327 (8.5 percent) in England, £752 (8.5 percent) in Wales, and £969 (7.6 percent) in Scotland.

In England, rents inflation was highest in London (9.6 percent) and lowest in the South West (6.4%), in the 12 months to August 2024.

Generation Rent chief executive Ben Twomey said: “Prices in the shops may have stopped rising so quickly, but renters are still seeing our single biggest cost go up faster than our incomes. This isn’t news to renters, who have been feeling this squeeze for a very long time as our landlords snatch away more and more of our wages.

“The government’s Renters’ Rights Bill, published last week, offers many positives for tenants, but the cost of renting crisis will rage on unless Westminster slams the brakes on these runaway rents.”

Gabriel McKeown, Head of Macroeconomics at Sad Rabbit Investments, told Newspage: “In a surprising twist, the UK housing market is showing signs of divergence, with house prices showing signs of cooling while the rental market continues to surge ahead.

“This continued strength in the rental market can be attributed to a perfect storm of factors, with a squeeze on mortgage affordability pushing potential buyers into renting. Furthermore, as Chancellor Reeves sharpens her fiscal scalpel with landlords on the cutting block, a mass exodus from the rental market has already begun.

“Against this backdrop, the impact could be devastating, with the cost-of-living crisis making it harder to save for deposits, trapping many in a rental spiral.”

Chief executive of the estate agent body Propertymark, Nathan Emerson, warned that landlords are pulling out of the market and selling off their properties.

He said: “The rental market continues to operate with a very strong headwind, as many landlords battle increased overheads and uncertainty regarding future legislation.

“Landlords have faced a complex combination of high inflation, interest rates, maintenance costs and a more demanding taxation structure over the last few years. In turn, this has had a profound impact on their ability to operate and in some circumstances has forced good landlords to make the difficult choice to sell up and leave the sector.

“To keep rental costs across the UK sustainable, Propertymark is keen to see a progressive approach to future housing strategy and a plan that encourages long-term investment. With an ever-growing population, it is imperative that supply keeps up with real-world demand and that future planning carefully considers key regions where demand is most prevalent.”

Hampshire Trust Bank managing director, specialist mortgages, Alex Upton, said: “With tenant demand remaining robust and rental stock not quite keeping pace, it’s no surprise that rents are climbing.

“As the Royal Institution of Chartered Surveyors has noted, while more landlords are bringing properties to market, tenant demand is still outstripping supply. This imbalance is likely to push rents higher as we move forward.”

He added: “Rather than a mass exodus, what we’re seeing is a refinement of strategy among professional landlords who are keen to adapt to the evolving market.

“There’s growing interest in more specialist, higher-yielding investments—such as houses in multiple occupation, or semi-commercial properties—that can provide a better return on investment.”