Rents to soar over next 3 years

[Twiglets1]

As reported in the Telegraph today, the Resolution Foundation has calculated that rent will rise at almost double the rate of earnings between now and 2027. The think tank said tenancies for new and existing lets are expected to grow by 13% over the next three years – almost double the 7.5% growth in average earnings, as forecast by the Office for Budget Responsibility.

The cost of rent for new tenants has increased by 18% since January 2022, but this burst of growth is yet to work its way through the whole private rental sector.

Cara Pacitti, senior economist at the Resolution Foundation, said: “Millions of families agreeing new tenancies across Britain have faced surging rents in recent years, as we have emerged from the pandemic.
“Those rises for new tenancies are starting to slow but how much renters actually pay will continue to outgrow how much they earn for some years to come as those not yet exposed to higher prices are hit.
“With more families renting privately, and renting for longer too, these rent surges are a bigger problem for Britain, and require bolder solutions from policymakers.”

The question is, with mortgages & rents both becoming unaffordable to many, could the next election be won or lost on the issue of the property market crisis?

https://www.telegraph.co.uk/money/property/buy-to-let/tenants-face-three-more-years-of-soaring-rents/

I think a lot of tenants are reaching the limit of what they're able to pay in rent- so rents increasing further will likely just reduce the supply of tenants? Obviously people need somewhere to live, but given the rise of remote working etc, more people can live further out from city centres etc, and may well negotiate e.g. for only 1/2 days a week in the office, or similar.

Obviously it's very tricky for families and people who have strong ties to an area, but I do think we're seeing young professionals priced out of more areas- and so if companies want to recruit the best people, they're going to need to be flexible.

I think you'll also just get more young people living at home for longer, in many cases until they can save for a deposit and buy- this is obviously already happening in a lot of cases. If interest rates come down a little, as predicted, then buying looks more realistic for more people as well.

I do think governments need to look at the rental market as a whole, and consider how things like the rise of Air BnB have had a pretty major impact on it.

I do think the housing crisis is a big issue for the next election, but it's a complex issue for political parties, as any solution that involves house prices significantly dropping is unlikely to be popular.

Labour could introduce rent controls.

They're unaffordable now, let alone with an increase

We need rent controls and we need a huge social housing building programme. We need to build around 5 million social housing properties.

Rent controls are exactly the sort of measure which has caused the rental crisis we see today. The rise of regulation in the PRS, most notably, the S24 tax changes, have had a massive impact on LLs leaving the market at a time of huge immigration.

Landlords may be a hated breed but have nonetheless provided housing over the last 20 years for thousands of tenants who really should be able to access social housing and who have been failed by successive governments.

The way to improve the lot of renters is not to put more controls on landlords. It's to build more housing.

We need both. I am not anti landlord, private rentals are part of the market and absolutely should be but back until the late 90s we had some degree of rent control until it all went out the window and rents soared in comparison to earnings at that point.

My own view is we need to be looking at giving insurance companies and pension companies big tax breaks to build to rent for social rates and buy up 'some' on non new builds too.

Also I would bring back self declare mortgages at 80% based on granting on levels no higher than current tenants are paying in rent . There are an awful lot of self employed and freelancers in the UK paying very high levels of rent who simply cannot access mortgages high enough due to how you declare incomes when self employed (as you can allow for lots of costs) but could easily afford mortgages and often the deposits too.

I agree that we will probably see more people having to move away from the more expensive places likes towns and cities and towards less expensive areas like rural areas with fewer facilities just to afford to rent/buy. Though there seems to be increasing pressure on people to return to the office more than once a week now, so don't know how that's going to pan out.

And it's definitely true that younger people are already having to live at home for longer, let alone if the situation gets even worse. Like my son who is still living at home at 25 and no plans to leave. It would really hurt him to pay the huge rent he would need to pay even for a studio flat or room say, in our part of the South East. And amongst my friendship group, we all have adult children living at home well into their 20s. Their salaries aren't particularly high but rents in this area are.

Have Labour committed to that, do you know?

God knows. Im politically homeless so have not really been paying attention

I would pay attention if this was part of a manifesto, along with filling the 100k vacancies in the NHS, plans to bring waiting times down for investigations and surgery, plans for people to be able to access NHS dentists for GP surgeries to operate to meet the needs of the patient, for more school provision, for SEN school provision, social care adults and children to be address.

Perhaps Ive missed all that.

yeah I know what you mean. I feel politically homeless myself. Can't vote Tory, but not much faith Labour will be better. I've never felt so disillusioned with politics.

Landlords do seem to be a hated breed on Mumsnet. The trouble is, there are so many bad ones.

They are needed though, that's for sure. What we needed were regulations to improve things for tenants so they couldn't be treated like second class citizens by bad landlords, not drive decent landlords away from the business altogether.

What is needed is social/council housing that is not for profit and available for any who needs it , as that puts an upper limit in what rents can be charged and a minimum standard

At the moment landlords seem only prepared to invest if they get the mortgage and all costs covered which lets them buy them the house for almost free

It would take a decade or 3 to get back to where we were in the 1970s

As most landlords say they are accidental and aren’t in it for money and it’s all about giving back to society providing homes for those who don’t or can’t own a home, I think they should sell their extra houses to the government who can then turn these homes into social housing. I read a report saying that we have more housing stock per capita than ever, so there isn’t a housing shortage crisis there is a housing cost crisis.

The government should pay a fair market value to the landlords ofc, but I think that we need to move away from having a large PRS. The PRS should be limited to student lets done by student housing companies. No private individual should be allowed to own more than one home nor create a shell company to own homes either.

Any evidence what you posted about LL?

FYI, there are good LL's as well as "bad" ones just like T's and that is a fact.

In every walk of life you get good and bad

Even in soc housing, you get good and bad on both sides.

What is your point and where is the evidence?

I've seen first hand several times what some T's have done to a LL's place and if I said it was disgusting, that would be the understatement of the centrury

Rather than blame some LL's, why not suggest realistic solutions??

I was watching a tv programme a few years ago and they said the majority of people in France and some parts of the EU rented as it was the culture there.

The laws should be changed that are fair to LL's and T's, more so than now

We've worked hard and even harder to save/spend money wisely. However, I've seen many and heard of many who work, earned a lot more than us and have little to show for it

We must never forget LL's are not only offering good property to renter but also have a home of their own therefore freeing up soc hoisung for those most in need

Evidence that there are lots of bad landlords? Plenty of evidence just from Mumsnet posts alone. Take a look around this site and you will see anecdotal evidence, not to mention media reports on cases of slum LLs allowing mould to grow unchecked etc

I'm not saying all LLs are bad or all tenants are good, however. I even mentioned that the solution was not to "drive decent landlords away from the business"

I wish people wouldnt come out with this home ownership myth again

Germany rent much more than we do, but we're pretty much on a par with France and much lower than Italy and Spain and some other EU countries

There are also too many bad tenants. The law has swung from protecting bad landlords to protecting bad tenants. Ideally what is required is a fair and balanced law that enables tenants rights and landlords rights to be protected.

Many landlords are selling up as a result of being unable to carry the risk of bad tenants. I know I am. This will reduce supply, pushing rent up higher.

And you are correct about the vitriol landlords receive on mumsnet. Apparently, we should be in it for the goodness of our hearts, and subsidise the rent to mitigate market forces.

Yes I do agree with you about there being too many bad tenants also. The tenant/landlord relationship seems fraught with danger on both sides of being exploited. It's a shame both sides can't just behave decently 100% of the time, but I suppose that's an unrealistic ideal.

As you say, the law should be fair and balanced and robust enough to protect the rights of tenants and landlords.

I agree, social housing is what’s needed.

So it was Germany - like i said i saw the tv show and in hindsight, we should have bought more flash cars flown business class every time and stayed at better hotels rather than saving and looking after our properties with the possiblity of all of it going to care fees.

I totally agree with your "myth" scenarios.

The very rich can play around with their taxes as well as big and small business along with the slef employed. However, people like us that worked for someone and paid PAYE, we are screwed

Come the tax returns and we are hoping of doing them this week, we are very careful to esnure we pay every penny and if in doubt, we side on paying more taxes rather than being landed with a massive bill later

We rent out well below market rates but many T's forget there are many good LL's that look after their T's really well. We are not rich and could do with the extra few thousand every year but we like to be more than fair to people that we feel are ok

There is nothing else I can add to that, one of the best posts I've seen for weeks.

If there is a better and fairer sytem for all, as LL's we are up for it but it has to work both ways

With net immigration running at 672,000 people per year (Source : ONS) creating massively increased demand for the same number of homes, what do people expect? 🤷🏻‍♀️

These days it is very unlikely that landlords get all costs covered.

I make an annual loss on mine of about £1000 and that's before any maintenance and repairs. The only benefit to me is the long term gain from the increase in property prices.

I've been a landlord for about 20 years and it has always been this way for me. Until recently, I had decent tenants, but the last 3 sets have destroyed the place, and given me other problems. I was luck to get one set out fairly quickly without having a protracted court battle. Had they stayed without paying, I'd have lost the house.

If I didn't have a mortgage on it, it would be a different story, although it wouldn't change the risk profile. It is only really worth being a landlord now if you have several properties and a reasonable float in hand to cope with issues.

You agree with my myth scenarios? What are they

I was referring to the myth that the UK has huge levels of home ownership compared to the EU/other countries. Its not the case and it keeps getting dragged up in discussions like this where it is posited that people in the UK are 'obsessed' with home ownership. Have on a par or lower levels of ownership and have done for some time, Germany excepted.

In terms of care fees, for me personally, if I needed to move out of my home and into a nother, I wouldnt expect to keep the first home, why would I? My home will pay for my care hopefully, if I need it, hopefully I dont need it.