08 April 2024 , 07:21
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Despite millions already facing sky-high costs, the Resolution Foundation think-tank warns that for many renters there are ’significant housing cost rises yet to come’
Average rents could surge by 13% over the next three years piling even further pressure on cash-strapped tenants.
Despite millions already facing sky-high costs, a leading think-tank warns today that for many renters there are "significant housing cost rises yet to come". In recent years renters have seen the fastest rises on record with the cost of new tenancies having already grown by 18% since January 2022.
While those spikes are starting to cool, the Resolution Foundation warns it could take years for increased fees to hit the whole sector of the private rental sector. "New renters will pay these new higher rents, while existing tenants reaching the end of a tenancy or forced to accept within-tenancy price rises, will in future face large rent hikes," the think-tank says.
If it is assumed that average rents paid will return to their pre-Covid level compared to earnings in three years’ time, then rents would typically see more than 13% price increase over that period, the report said. This would far outstrip the growth in earnings expected during that time.
According to figures published last year roughly 4.6million households in England are privately renting. The Resolution Foundation says the number has almost doubled in a generation - from 11% in the late 1990s to almost 20% today. Their report also notes the number of poorer families with someone aged between 30-49 and renting has almost tripled from the mid-1990s to today.
The property website Zoopla said in February the average monthly rent in London - where costs are the highest - stood at around £2,119. This was an increase of £130 on the previous year. The figure stood at £1,162 in the East of England while the average cost in the North West was £847. The North East had the lowest figure at £695.
Senior economist at the Resolution Foundation Cara Pacitti said: “Millions of families agreeing new tenancies across Britain have faced surging rents in recent years, as we have emerged from the pandemic.
"Those rises for new tenancies are starting to slow, but how much renters actually pay will continue to outgrow how much they earn for some years to come as those not yet exposed to higher prices are hit. With more families renting privately, and renting for longer too, these rent surges are a bigger problem for Britain, and require bolder solutions from policy makers."
Responding, the chief executive of Generation Rent Ben Twomey said: "Renters have nowhere to hide from the housing crisis. It doesn’t matter what you’re earning: if your landlord thinks someone else would pay higher rent, then they can demand more of you, and threaten you with eviction if you push back.
“Rising rents mean we have less to put aside for the future, and less to spend on actually living. As well as building more homes and giving enough support through the benefit system, the government needs to stop landlords raising rent beyond what we as tenants can actually afford.”
A government spokesman said: “Our Renters (Reform) Bill will give people more security in their homes and empower them to challenge poor practices. Through our long-term plan for housing, we are investing £11.5 billion in the Affordable Homes Programme and remain on track to build one million over this Parliament.
“We are supporting people with rising costs with £108 billion to help with bills – an average of £3,800 per household, and we have increased the Local Housing Allowance rate so private renters on housing benefit or universal credit are on average nearly £800 a year better off.”