Private rents have increased by 8.4% over the past year, according to the latest data from the Office for National Statistics (ONS). In August, the average rent across Great Britain reached £1,286. London saw the highest rent inflation at 9.6%, while the South West experienced the lowest at 6.4%. Meanwhile, house prices across the UK rose 2.2% in the year to July, with first-time buyers facing an average price of £242,789.
Renters facing ‘no light at the end of the tunnel’
The rental market continues to face severe pressure as demand far outstrips supply. Sarah Coles, head of personal finance at Hargreaves Lansdown, explained the grim reality for tenants: “If renters think there may be light at the end of the tunnel, they’re sorely mistaken. They’re in a deep, dark hole, and that light is coming from somewhere way out of reach.”
Landlords selling properties, coupled with high tenant demand, has made the situation more challenging. According to Zoopla, there are now 21 renters chasing each available property. “Rents are up 8.4%, and while they’re not rising as fast as they have been, they’re still climbing,” added Coles. The government has promised that its long-term plan to build more homes will help alleviate pressure on the rental market, but renters may see little relief in the short term.
House prices continue to rise
Property prices rose modestly, with an average house price of £290,000 in July, up 2.2% from last year. The gap between new-build properties and existing homes has widened significantly. New-build prices jumped by 23.2%, while existing properties saw only a 1.3% rise. As mortgage rates start to decline, more buyers are returning to the market, and growth could continue into 2025.
Jean Jameson, Chief Sales Officer at Foxtons, commented on the state of the market: “August, although traditionally a holiday month, continued to outperform 2023 with a post-election bounce. Buyer enquiries were up 27%, and vendor confidence is increasing, with the number of instructions up 22% year on year.”
For those hoping to climb the property ladder, rising prices are a double-edged sword. Coles advised potential buyers to prepare: “If you’re in this position, it’s worth considering what you can afford to save towards the move. The bigger your nest egg, the easier the stretch will be onto the next rung of the ladder.”
Landlords under pressure from rising costs
The ongoing challenges faced by landlords are a key factor contributing to the high rent increases. Nathan Emerson, CEO of Propertymark, highlighted the difficulties landlords are up against: “Landlords have faced a complex combination of high inflation, interest rates, maintenance costs, and a more demanding taxation structure over the last few years. 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 prevent further increases in rental costs, Emerson stressed the importance of a strategic approach to future housing policy. “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,” he said. A growing population and limited housing supply remain critical issues that policymakers must address to ease the ongoing crisis.
With the housing market showing some signs of recovery, and the possibility of interest rate cuts on the horizon, buyers and investors may feel more optimistic.
House price data was published by the Land Registry: UK House Price Index: reports – GOV.UK (www.gov.uk)
