New figures indicate that average British residential property rental values rose significantly within the year to July 2016.
Many Britons are finding it increasingly hard to step onto the property ladder. According to Letting Agent Today, Tony Williams of property consultancy Building Value recently noted that at present, “the house price to earnings ratio remains around 5.5 times against a long term average of 4.25 times.”
Within this context, many Britons are choosing to rent for longer, before traversing the property ladder. Commenting on this trend, Williams argues that “a large proportion of 25 to 45 year olds will be permanent tenants rather than buyers.” New data from the Office for National Statistics (ONS) indicates that this environment is inflating UK rents, which are continually rising right now.
Rising UK rents
Landlord News reports that average UK rents increased by 2.4% during the year to July 2016 – a rate of growth which remains unchanged from June 2016. In regional terms, average rents climbed by 2.6% in England and 0.2% in Scotland, while remaining static in Wales, during the year to July.
Average rents increased across various English regions during this time frame. The South-East saw the highest rise, at 3.5%, followed by the East (3.1%) and London (3%). In contrast, some regions saw smaller yearly average rent increases. This includes the North-East (0.9%) and the North-West (1.2%) along with Yorkshire and the Humber, at 1.3%.
English rental values have risen by between 1.4% and 3% year-over-year since the beginning of 2012. In contrast, Scottish rent rise rates have recently fallen from a high of 2.1% in the 12 months to June 2015, while Wales is significantly behind the rest of the country, due to a lack of forward movement.
Furthermore, between January 2013 and June 2016, UK house prices have expanded at a faster pace than rents. Average residential property values have grown by 6%, in contrast with 2.1% for rents.
RentPlus Chief Executive Officer Richard Connolly said: “The issue of increasing rents is not confined to London with the largest rental price increases in the South East, followed by the East of England, which highlights the fact that housing affordability is firmly a national issue.
“The struggles are numerous with aspirant home owners in the current climate also facing rising fuel bills, low salary growth and low interest rates from savings accounts. This all points to the urgent need for a rethink in this country on the housing models that are used to migrate people into home ownership.
“New innovations such as rent to buy models, which allow people to benefit from affordable intermediate rents and make real savings toward a home of their own, ought to be part of an inclusive UK property market which provides secure affordable housing options for all.”
Tackling the housing crisis
With rents continuing to rise, it is increasingly clear that the UK is facing a housing crisis. Low supply pushes up prices, forcing young Britons to save bigger deposits, so many choose to rent permanently instead. How do we create secure, affordable housing options for all? It is vital that the UK implements a more stable planning system. With this approach, there will be more certainty for developers and communities, allowing them to supply more secure affordable housing options for young Britons.