As the Renters (Reform) Bill gradually advances through Parliament, the UK faces a deepening “cost of renting crisis” with significant increases in rental prices, according to the latest HomeLet Rental Index.
Continuous Rise in Rental Prices
The HomeLet Rental Index has recorded a 1.6% increase in UK rents this month, marking the fourth consecutive monthly rise. Particularly stark is the situation in London, where rental prices have surged by 3.1% in just one month, translating to an additional £65 per calendar month compared to March. Across the nation, the average UK tenant is now paying an extra £21 per month.
Impact on Tenant Finances
The increasing rental costs mean that UK renters are now spending a significant portion of their income on rent, with the national average reaching 33.3%. In London, the figure is even more pronounced, with renters dedicating nearly two-fifths (39.1%) of their income to rent. Despite predictions of decreasing inflation from the Bank of England, the rental sector continues to see escalating costs, with an overall annual increase of 7.9%, and a staggering 35.8% rise since January 2020.
Calls for Government Action Amid Legislative Delays
Andy Halstead, CEO of HomeLet and Let Alliance, emphasised the severity of the situation: “A trajectory like this could see rental prices increase by almost 20% over the next 12 months, which would be the equivalent of over £250 more being paid out each month by the average UK tenant.” Halstead urged the government to act swiftly to provide both landlords and tenants with much-needed clarity as the Renters (Reform) Bill moves slowly through the legislative process. He highlighted the adverse effects of this delay, noting that “uncertainty and delays to important legislation like the Renters (Reform) Bill create uncertainty, leading to landlord churn and market volatility.”
As the bill recently passed its third reading in the House of Commons and entered the House of Lords, the private rented sector remains in limbo. The anticipated abolition of “no fault” evictions, or Section 21 notices, is a crucial aspect of the bill that many hope will stabilise the market. However, the prolonged legislative process and the resulting uncertainty continue to disrupt the market dynamics, pushing rental prices higher and constraining the available rental stock.
The situation underscores the urgent need for effective legislative action to address the challenges facing both landlords and tenants in the UK’s rapidly evolving rental market.
