Is the cost of rent rising?
2015 saw the cost of rent continue to rise, but could things be set to change for the better?
At the end of April, the Office of National Statistics reported that the cost of rent in the UK had risen by 2.6% over the last year. In the same period, average weekly earnings grew by just 1.8%. This does not make surprising reading with increasing rents and subdued income being a common narrative following the financial crash in 2008. But could the fortunes be set to change for renters? As the government implements its new 3% stamp duty surcharge, the hope is that demand for buy-to-let property will reduce and housing will become more affordable for aspiring first-time buyers.
Steve Griffiths, Head of Sales and Distribution at Kensington doesn’t believe so, stating:
“With buy-to-let stamp duty rises now in effect and further tax changes on the horizon, the situation for renters could worsen if these increased costs are passed onto tenants.”
Martin Totty, Chief Executive of Barbon Insurance Group argues that the extent of the changes remains to be seen:
“We will have to see whether landlords try to pass their higher costs on and whether tenants are able to afford further increases in rents. There has been little to alter the fundamental relationship between demand and supply, especially in those parts of the country where demand-side pressure is greatest”.
Despite 142,000 homes being built last year (a 21% rise on the previous 12 months), this still falls short of the government’s target of 200,000 homes.
Resolution Foundation, which measured prices in real terms, found that over 3.3 million people now spend a third of their income on mortgage/rent, insurance, water rates and service charges.
These findings make for pretty stark reading for renters. However, Tenant Shop, a comparison service for energy, TV and broadband, could be the first step for tenants battling the increasing cost of living. In 2015 Tenant Shop helped over 11,000 tenants switch their services, for an average saving of £209 per tenant. When added up this equals a whopping £2.4 million of savings.
Tenant Shop are partnering with property software specialists VTUK to conduct a debate into the rising cost of renting. The debate takes place on Twitter this Wednesday 8th June at 11am, VTUK and Tenant Shop are urging property professionals to get involved using the hashtag #QuestionTribe.
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