Relentless house price hikes spell gloom for renters under financial pressure

A third record house price increase means renting is now the lifelong norm for a growing proportion of UK tenants, experts have warned this week, as the cost of an average home reaches £354,564.

The data, from Rightmove, shows price hikes continue to dramatically outpace salary rises, with increasing inflation eating away at disposable income and deposit savings.

“For renters already dedicating a far higher proportion of their monthly income to housing than average mortgage holders, seeing house prices continue to rise and stock disappear, all while the cost of living soars, will be a real kick in the teeth,” says Gary Wright, co-CEO of payment technology firm flatfair.

A study by Halifax last month showed that renting added around £1,400 to annual costs. In some areas, renting is 20 per cent more expensive.

Flatshare site SpareRoom has found that room rents in 41 of the 50 largest towns and cities reached a record-breaking high in the first quarter of 2022.

While Greater London room rents hit their highest price on record at £794, rents increased across all UK regions, including in Northern Ireland, where costs are up 14 per cent in the last year – almost twice the rate of inflation.

In Scotland and Wales, prices are both up by an average of 10 per cent year on year.

Meanwhile, when it comes to individual cities and towns, Sunderland’s rental prices are up 19 per cent.

Separate research by Plumbnation suggests the most expensive place to rent is now Oxford, where the average monthly rent comes in at £2,357 followed by Bath at £2,115 and Brighton at £2,014 a month.

At the other end of the scale, Burnley, at £506 on average per month, offers the most affordable location for renters, with Halifax (£520) and Doncaster (£525) close behind.

“Rents are climbing across the country and are already reaching record highs in the majority of towns and cities. That’s going to be incredibly unwelcome news for renters, many of whom were already financially stretched and will be wondering how they’ll cope with increased rents, alongside a sharp hike in the cost of living,” says SpareRoom director, Matt Hutchinson.

“With a substantial proportion of flatsharers having bills included in their rents, this may just be the start. The effects of the price cap rising won’t have kicked in yet and, when the second phase comes into effect in the autumn, just as we’re heading into the colder months, we may well see more records broken."

Among those who received advice from debt charity StepChange in 2021, most were employed and the majority were women – a third of whom were single parents. But a staggering two-thirds were also renting from one source or another, a clear indication that tenants were disproportionately affected by the squeeze in everyday living costs.

And that was before the serious hikes of the first months of 2022 kicked in.

“Things will have become even worse since, and the nightmarish price hikes we’ve seen this month will tip many more over the edge. Last year, slightly more than one in 20 people said they were in debt because of the rising cost of living,” says Sarah Coles, senior personal finance analyst at Hargreaves Lansdown. “We can expect this figure to jump dramatically for 2022.

“Vulnerable groups were more likely to have fallen through the cracks, with single parents and renters more likely to need help with their debts. This reflects the findings of the first [ Savings and Resilience Barometer], produced with Oxford Economics, which found that renters were less resilient because the cost of keeping a roof over their head absorbs a much higher percentage of their income than a mortgage would.

“The coming year is going to take a toll on millions of people. If you’re starting to struggle at all, it’s vital to get some help as soon as you can. This can include debt charities like StepChange, organisations such as Citizens Advice, which can help you understand what other assistance is out there, and mental health charities, which can offer information and support.”

Meanwhile, says Wright, there are still options at a policy level.

“Given the government’s stated goal of helping out Generation Rent, it should start by unlocking the £4.5bn locked away in rental deposits,” he says.

“This could be put to far better use by renting households in tough financial circumstances.”