The UK saw record rent increases last year, with the latest data from the Office of National Statistics (ONS) yesterday revealing that private rents in England rose by 6.1% in 2023.
However, it was Wales that saw the biggest annual increase in rents, with prices rising 7.1% over the year to December, down only slightly from the 7.3% rise in rents in the year to November. In Scotland, rents rose by an average of 6.2% last year.
Tom Bill, head of UK residential research at Knight Frank, said: “Low supply continues to cause financial pain for tenants as it keeps strong upwards pressure on rents. Landlords have been disincentivised by tax and legislative changes in recent years and there is no sign of that changing, particularly as the general election campaign gets underway this year.
Political interference has had the unintended consequence of making life tougher for tenants although we expect UK rental value growth to calm down marginally to 5% this year as more demand is absorbed.”
Emma Cox, MD of real estate at Shawbrook, commented: “The gradual improvement in the market, falling mortgage rates and a rise in tenant demand will provide landlords with confidence in 2024.
“Despite tough economic conditions and uncertainty over the past 12 months, landlords have continued to add to their portfolios to cater for the needs of the rental market, which continues to grapple with a lack of suitable and available properties.
Sam Richards, a former Downing Street adviser and founder of pro-growth think tank Britain Remade, said: “The amount that people are having to pay for rent, especially in London, is simply out of control.
“It is astonishing that the rent paid for a one-bedroom flat in the capital will get you a three-bedroom home in the rest of England.
“The only way we can fix this is by reforming our outdated planning system so we can get spades in the ground and build more homes.
“Not only will this allow young people to once again fulfil their dreams of owning their own homes, but it is also critical to boosting productivity and job creation in and around our major cities.
“Until we build the homes Britain needs, millions of people up and down the country will be denied the dream of home ownership, while renters will be condemned to paying ever increasing eye-watering rents.”
UK house prices fall at fastest pace in more than a decade – industry reaction
With falling interest rates and falling house prices coupled with rising rents that would suggest buy-to-let becoming more attractive with better yields. Yet somehow the government’s attempts to help the PRS have ended up causing more pain to all parties. Interesting to see Scotland and Wales in a similar position to England despite the best efforts and all that …
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The Gov, Shelter and other activist groups were warned this would happen when they started to make things harder and more costly for Landlords.
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Potentially another 750,000 this year and they keep coming to the”Country of Sanctuary”
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I disagree with the use of the inflammatory language in the headline
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Landlords could sell quicker than ever before once they get wise of what is on the horizon.
Sunak stopped the forthcoming required EPC C rating, as financial suicide. Will Labour bring it back?
Now just before you ponder on that, landlords need to realise this with Air Source Heat Pumps.
Many are being installed on grants (one off option) and it is alleged that the wild west of some installers fitting OTT needs or poor installations. This has been having repercussions when it comes to annual servicing and warranty claims rejected. A common dislike to the installations are the noise and efficiency of the units, not long after being installed. They should never be put close to a wall, air has to circulate 360 degrees and if the foundations are not substantial, perfectly flat and level for the entire life of the unit to rest on, it will fail its bearings and not covered by a warranty. The fix is a new unit @ £7,000 to £8,000 average. A complete new installation is considerably more.
How long will that eat into your yield with all the other costs you have? Will landlords consider no income for several years is worth staying in the market? And you could end up with additional expenses to get up to a EPC ‘C’ unless you are post 1990’s build.
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Government policy is ridiculous. One the one hand the rental market needs more stock. On the other the government penalises landlords with high taxes, legal recompense favouring tenants and a raft of regulations. It’s not rocket science to realise that landlords, certainly with the current interest rates, would prefer to liquidate property assets and not have the hassle of tenants, the legislation to consider and similar if not the same tax rates – when they can obtain a higher and easier yield by putting money in the bank. With property prices in the doldrums why would anyone want to invest in a buy to let currently ? It all needs a rethink.
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