A perfect storm is brewing in the rental market and it is happening across the UK. Renter affordability is becoming increasingly stretched as growth in private rental prices continues. On average renters now pay 26.8% of their gross income on rent, compared to 25.7% three years ago.
Many people are asking why rents are increasing to such high levels. In the last 12 months alone they have increased by 9.3% in the Northwest. Across the UK annual rental growth was 9.8% in the year to March, based on new private tenancies (DRMA). A smaller growth of 4.9% was recorded by the ONS, which includes pre-existing tenancies and new lets.
The problem is rental price growth is currently stronger than wage growth, at 6.6% from December to February. Wage growth was also lower than inflation. This sadly adds additional pressure to household incomes.
The latest survey of agents by RICS indicates demand for rental properties continues to outpace available supply. The supply of rental properties is one of the biggest issues tenants are facing. A report out of Rightmove today states there are 46% fewer properties available than there were in 2019. The other issue is that demand for rental properties is 48% higher than it was in 2019. Hence we call it the perfect storm.
What are the answers? It’s a question everyone is asking. What we can say is if you have a property to let, we have lots of ready, waiting, pre-qualified tenants looking for homes. Equally, if you are thinking of investing in the local housing market, we are here to help and advise you.
My name is Josh Heron. You can call me on 01524 843322 or email me at josh@jdg.co.uk
Thanks for reading
Josh
