Private sector rents increase 4.5% to a new record

In another blow to the millions of families on some form of benefit or that are struggling to make a livable wage, the cost to rent a private sector home is at a new high. The rates being charged by landlords do change by city and area, but across the UK the average is about £780 a month. This is putting even more pressure on families to not only keep up with paying the rent, but they will then struggle to afford all of the other bills and basic needs their family has.

The increase does vary. The average across the UK was around 4.5%, but it ranges from around 13% in the East of England to a decrease of 2.8% in Wales. So some area actually had a decline in how much rent a tenant needs to pay, and this is good news for those areas. But that decrease was an exception and not the average.

The statistics from the buy-to-let index sampled thousands of properties to arrive at these calculations. It shows various reasons for the increase, and the biggest would be the lack of housing that is available in the private sector. With more homes being sold to the rich, and social housing also taking up a good amount of the inventory, what is left for the private sector is not enough to keep up with demand.

Another cause is that household incomes have very slowly been improving. While this has not been at a fast rate, the fact is that any increase in wages at all can’t be covered by the lack of affordable housing. So without extra supply, landlords have the ability to increase rents at a faster rate according to data from Your Move.

The most expensive area is still London with an average monthly rent of £1,207, and that is a 7.4% year-on-year increase. The cost of private housing in the East of London is also very high though. This is the result of areas such as Cambridge and other growing cities. The economy has been surging in those cities. The cost of private rent in that area of the UK has also increased 13% over the past year.

The economy is slowly improving in all parts of the UK, and more people are finding jobs. With household incomes finally starting to increase, albeit slowly, this is putting more power in the hands of landlords. Since the number of tenants who can afford to pay more is also increasing, these landlords are able to raise rents at a faster rate due to the lack of new housing being build.

The conservatives also continue to talk about cutting back on safety new programmmes, and one of them may be social housing. If this occurs, this will lead to an increased demand from the low income for other properties, and right now that can only be met by the private sector. This may then lead to further acceleration in the cost of monthly rent increases.

So anyone seeking a property in the private sector needs to expect to pay more money. While this will mostly be for rent, there may also be landlords that increase the damage deposit that is due, as that is usually tied to other costs.