Rent prices have risen, again – and this is particularly bleak if you live in London

Posted 28th October 2022 by ctatax-admin

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Read the article on Marie Claire

“Rent prices have risen – again. This is particularly bad news for those who live in London, which has seen the sharpest increase in rental fees over the last three months.

As society continues to try and navigate the cost-of-living crisis, with food and energy prices rising, the housing market in flux, and many taking on extra part-time work just to make ends meet, it’s bleak news that rent prices have been hiked up yet again – and may continue to rise.

The average rent for a property outside London is now £1,162 per calendar month – a rise of 3% in the last three months, according to research from Rightmove. In Greater London, the average rent has now risen to £2,343 per calendar month, with Inner London seeing the biggest increase – a huge 26.1% up year-on-year.

As Aneisha Beveridge, Head of Research at Hamptons explains, “Rising rents continue to be led by London, where rents rose 11.3% year-on-year across the capital and 26.1% in Inner London.”

This news comes despite campaign groups urging the government to put a cap on rent as landlords hike up prices, in order to try and protect renters from hugely-inflated prices.

While house prices might be falling, property rental prices in the UK have been increasing rapidly over the last year. According to previous data from SpareRoom, the average monthly room rent in London rose by 15% in the second quarter of this year compared to 2021. While in Sunderland in the north, there was a 21% increase and 20% in Belfast, while Cardiff saw an 18% increase.

And, as much as we hate to be the bearer of bad financial news, it doesn’t look like things are getting any easier, at least in the short term, with more rent hikes expected to take place next year.

“Things may calm down over the Christmas period, but expect rent increases next spring and summer,” Nathan Khider, founder of Nathan K. Real Estate(opens in new tab) in London, told us.

So why is this happening – and why is the situation particularly dire in London? “Rent prices are going up because landlord costs – particularly interest costs are increasing,” David Hannah, Group Chairman of property tax advisors, Cornerstone Tax “However, this is not the whole picture, as there is still a chronic undersupply of housing in the UK in the locations where people want to live. For example, rent rises in London post-pandemic have been as much driven by a lack of available properties as they have been by inflationary pressure.”

Khider agrees, adding, “Lack of supply and high demand is driving rent prices to increase. There are fewer rental properties on the market because the government is making it undesirable to become a landlord.”

While landlords have come under fire over increasing rent prices to gain more profit, Landlord groups have hit back, claiming that it’s not as simple as that. Chris Norris, policy director at the National Residential Landlords Association, told Sky News, “I wish it was as simple as landlords getting greedy and them wanting to make a bit more profit. Actually, we’re seeing the opposite.