Hamptons’ latest data reveals a significant rise in the UK’s rental payments, with tenants in Great Britain set to pay a record £85.6 billion in rent in 2023, more than double the amount in 2010 and an £8 billion increase from 2022. This surge in rental payments is largely driven by millennials and Generation Z, as they grapple with the housing market’s shifting dynamics.
The report shows that rents for new tenancies across Great Britain rose by 10.2% year-on-year last month, the highest growth for any November since records began in 2014. Generation Z, born between 1995-2012, is quickly catching up with millennials, born between 1980-1994, in terms of rental payments. This year, Gen Z paid £30.5 billion in rent, while millennials spent a record £36.8 billion, as higher mortgage rates prolonged their time in the rental market.
London tenants paid a staggering £32.1 billion in rent this year, surpassing the combined rental payments of the North of England, Midlands, Wales, and Scotland. The average rent for a newly let home in Great Britain climbed to £1,348 per calendar month in November, marking the seventh double-digit increase in the past 12 months.
Millennials continue to be the dominant demographic in the rental market, with their spending on rent increasing in recent years, contrary to expectations of a decline due to home ownership. In 2016, millennials accounted for 58% of all rented households, which dropped to 42% in 2021 but has risen to 44% in 2023. The combination of strong rental growth since the Covid-19 pandemic and higher mortgage rates is keeping older millennials in the rental sector for longer, with many likely to rent into retirement.
As Generation Z leaves home, more are becoming renters, with their rental expenditure in 2023 marking the biggest annual increase of any generation. They now constitute 36% of all renters, a significant increase from just 1% a decade ago.
Aneisha Beveridge, head of research at Hamptons, comments on the trend: “Tenants across Great Britain paid a record £85.6bn in rent in 2023, equivalent to the total value of all homes sold in London last year… Higher interest rates in the medium term are likely to mean more millennials rent for longer.”
She adds that the increasing tendency for millennials to start families while renting larger and more expensive homes is pushing up the total rent they pay. Beveridge predicts that this will result in Generation Z surpassing millennials in rental payments in the coming years, but at a later and higher point than previously anticipated.
The data underscores the evolving landscape of the UK housing market, with younger generations facing prolonged periods in the rental sector and adapting to the challenges of climbing the property ladder.
