As the Spring Budget draws near, housing experts are pressing Chancellor Jeremy Hunt to prioritise the needs of UK renters, amidst growing concerns over escalating rent-to-income ratios. New insights from HomeLet underscore the urgency, revealing an alarming trend that sees rental costs outpacing wage growth, putting significant financial pressure on tenants across the nation.
Andy Halstead, CEO of HomeLet and Let Alliance, has issued a stark warning to the Chancellor, highlighting the critical situation facing renters as the gap between rental inflation and wage increases widens. Despite a brief respite with a three-month dip in rental prices, HomeLet’s latest Rental Index indicates a slight month-on-month increase in rents, signaling a worrying reversal of the downward trend.
Amidst speculation of income tax cuts and homeowner assistance in the upcoming budget, Halstead emphasises the overlooked plight of nearly 5 million people living in rented accommodation, many of whom have no desire or means to purchase a home. He points out the prohibitive cost of property ownership in the UK, where even a 95% mortgage would require a substantial deposit, far beyond the reach of the average renter.
The current data paints a bleak picture for renters, who now allocate 33.3% of their income to rent, excluding utilities and other living costs—a figure that has risen by 2.3% in just a year and continues to climb. With rental prices on the rise across most UK regions, tenants are facing an additional financial burden, with some regions like the South West experiencing increases that translate to nearly £20 more per month.
Halstead’s call to action urges the government to acknowledge the pressing need for support within the rental market, advocating for measures that would assist both landlords and tenants in navigating the current economic challenges. He stresses the unsustainable nature of the current rent-to-income ratio, advocating for a comprehensive approach to housing policy that supports the entire housing industry, not just prospective buyers.
The HomeLet Rental Index also reveals a 7.4% year-on-year increase in UK rents, further highlighting the relentless rise in rent-to-income ratios. While Greater London has seen a slight decrease in rents, other regions like the South West and the North East are facing significant increases, exacerbating the affordability crisis for renters.
In light of these findings, Halstead’s message is clear: the time for government intervention is now, with a call for the Spring Budget to include meaningful support for the rental market to mitigate the impact of rising costs on both landlords and tenants.
