Rents are growing at fastest rate in seven years

Tenants are seeing rents growing at their fastest rate since 2016 when records began, says the Office for National Statistics (ONS).

The data shows that 26% of tenants reported their rent had increased in the last six months with rents increasing by 4% in the year to November 2022.

One reason for this is that private landlords are passing on their increased mortgage costs.

The data also reveals that for tenants in England, the £730 average monthly rent was the equivalent of 26% of an average household income of £2,825 per month.

In Wales, the £550 monthly rent was the equivalent of 23% of an average household income of £2,350, and in Northern Ireland, the £600 monthly rent was the equivalent of 23% of an average household income of £2,605.

London is the least affordable region for tenants

Unsurprisingly, London is the least affordable region for tenants with a median rent of £1,430 which is the equivalent of 40% of a tenant’s median income.

The most affordable regions with median rents are the West and East Midlands with rents that are equivalent to 21% and 22%, respectively, of median income.

Despite having very different levels of median income and rents, Yorkshire and the Humber and the South East had similar ratios of private rental affordability at 31%.

Number of privately rented dwellings has doubled

The ONS’ report also highlights that the Department for Levelling Up, Housing and Communities estimate that the number of privately rented dwellings has doubled in England since 2001, to 4.9 million, or 20% of all dwellings.

A similar pattern has occurred in Wales, where an estimated 14% of dwellings were privately rented and in Northern Ireland where 14% of households are privately rented.

The ONS is also warning that rising mortgage rates are a concern for 45% of borrowers after a steep rise in costs last year.

And while the cost of an average two-year fixed-rate mortgage has fallen slightly after market turmoil was stabilised, borrowers are still seeing higher rates than last year at 5.78%.

1.4 million households look set to renew their mortgage

The ONS says that 1.4 million households look set to renew their mortgage this year with rates rising from 2% to 6% which could see the average monthly repayment rocketing by £220.

Sarah Coles, a senior personal finance analyst at Hargreaves Lansdown, said: “They’re coming to the end of fixed rate deals – most of which are under 2% – and face fixing at as much as 6%.

“It means either paying more for years – or reverting to a sky-high SVR while they wait for rates to fall.”

‘Life is even harder for renters’

Sarah added: “Life is even harder for renters, one in four of whom say their rent has been hiked in the past six months.

“On average they are up 4%, but rent rises hit particularly hard because they account for so much of people’s incomes.

“In the year to March 2021, renters spent £106.50 a week on rent, after benefits, or 24% of their weekly spending.

“Mortgage holders spent more – at £140.80 a week – but it only made up 16% of their weekly spending.

“It means it doesn’t take a huge percentage increase in rental costs to put households under horrible pressure.”

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