Soaring UK rents leave tenants facing eviction and homelessness

Soaring UK rents leave tenants facing eviction and homelessness

Soaring UK rents leave tenants facing eviction and homelessness

Searing rent increases across the UK are putting pressure on tenants already struggling with soaring living costs, driving some out of their homes and stoking fears the market is overheating.

Rents are rising at their fastest pace since the financial crisis due to a combination of increased demand, a slowdown in rental housing turnover and opportunistic efforts by some landlords to pass on rising costs to the tenants.

Average rents for new leases are up nearly 10% from a year ago, according to real estate agent Hamptons International, and a growing number of tenants are unable to meet their payments and risk eviction . Tenant groups are warning that the market is overheating and tenants are therefore facing homelessness.

Eva Wullich, an undergraduate student at the University of Edinburgh, has successfully negotiated her rent increase from 35% to 20%, but the price of her house will still be fixed. “We have to move in two weeks and we literally can’t have viewings [for other properties],” she says.

“With everything going up, it’s gotten to the point where I don’t eat as much as I used to, I’m scared to buy food because I’m stressed,” she added.

In major cities, the return of some of those who left during the pandemic alongside international students and business travelers has led to a surge in demand for rental properties.

Eva Wullich has negotiated her rent increase from 35% in Edinburgh to 20%, but is still being forced out © Paulo Nunes dos Santos/FT

Supply and demand have become increasingly uneven in recent months. According to estate agent Foxtons, there are 40% fewer homes to rent in London than a year ago. According to its data, 28 tenants were competing for each new property that came on the market last month.

Meanwhile, homeowners’ groups say the stock of available properties is shrinking because rising taxes and rising interest rates are pushing them out of the market – although the evidence for this is inconclusive.

Ben Beadle, chief executive of the National Residential Landlords Association, blamed rising taxes and other policies for making homeownership less attractive and reducing the number of homes available.

“Rents will only continue to rise if ministers change course and recognize the damage caused by their policies,” he said.

Official data on the size of the private rental sector is inconclusive. Figures released by the Department for Leveling, Housing and Communities suggest the number of privately owned homes hit a record high in England last year, while data from the England Housing Survey indicate that the number of households in the private rental sector has actually fallen since 2016.

However, neither shows an exodus of landlords, suggesting that other factors are driving up rents.

The stock of available housing is partly reduced as tenants sign longer leases. According to Hamptons, half of all leases signed in 2012 were for two years or more; today that figure has dropped to around three-quarters, meaning properties are available less frequently.

Line chart of average rents for new leases more than 8% higher than a year ago, showing that average rents have increased over the past two years

Wherever possible, tenants want to stay put to avoid having to find new accommodation in a competitive market, according to Alicia Kennedy, director of tenant campaign group Generation Rent, which is calling for a rent freeze to protect the tenants.

“The real problem is that there’s not enough housing — not enough affordable housing, not enough social housing, not enough housing overall,” she says.

Landlords also face increased costs due to rising mortgage rates and increasingly stringent environmental regulations, some of which are passed on to tenants.

Elaine Power, a residential landlord in Newcastle, insisted she could not afford to keep rents low. “There are three parts to this story: tax increases on mortgage interest rates, regulation around energy efficiency and rising interest rates,” she said.

But tenant groups complain that less scrupulous landlords are opportunistically inflating prices and exacerbating a rise in homelessness.

Data from property portal Rightmove suggests landlords are confident they can raise rents well beyond pre-pandemic levels. In London, the average asking rent last month was 14% higher than in July 2019; in Manchester 27% more and in Cardiff 36% more.

In Manchester, Tilly, 25, who did not want to give her full name, said after renting together for a year she and her boyfriend were forced to move out after receiving an eviction notice in the end of their tenancy. . “All of our stuff is in storage and we’re now couch surfing with friends and family.”

She added that there were very few properties available and those comparable to their previous accommodation are now 30-70% more expensive. “It was horrible, it really affected our mental health,” she said.

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According to government guidelines, rent increases “must be fair and realistic, i.e. in line with average local rents”, but there is no cap on how much landlords can raise rents on existing leases or between tenants.

Meanwhile, average local rents are jumping. Power is renewing leases on two-bed properties it owns in east Newcastle and has been advised by local estate agents to raise rents from £450 to £600 a month.

These increases trickle down from expensive cities to more affordable areas. “People are moving to Scotland because prices are lower,” said Sean Baillie, national committee member of Scottish tenants group Living Rent. “Housing problems in London and Dublin are now spreading to Glasgow.”

This spillover has fueled concerns that the national rental market is overheating, with potentially disastrous consequences for tenants. The end of a tenancy is the most common cause of homelessness in England; Since a moratorium on evictions was lifted last year, the number of homeless people has risen sharply.

According to government figures, 13,810 households were at risk of homelessness in the first three months of this year, up 17% from the same period in 2019 and almost double the same period in 2021. The main reason for the increase, according to the government, are “owners wishing to sell or re-let the property”.

An increase in invisible homelessness is already being seen, Baillie said. “That doesn’t necessarily mean a lot more people on the streets, but people couch surfing or living with friends.”

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