Rents Could Soon Rise Faster Than House Prices, Surveyors Warn
The Debrief: The cost of renting in the UK could rise faster than house prices over the next five years, surveyors are warning
Sorry to remind you of this, but just in case you’d forgotten, there’s a housing crisis right now. For those of us who belong in ‘Generation Rent’ this is not exactly news.
And, just to really rub salt in the wound, just to really put the nail in the coffin that houses our hopes and dreams of becoming homeowners, today the BBC has reported that the Royal Institution of Chartered Surveyors (RICS) has just warned that the cost of renting in the UK could be set to rise far faster than house prices over the next five years, based on their estimates.
Not great news. More of us than ever before aged between 24 and 35 are renting, as opposed to sitting pretty in our own homes, gradually paying off a mortgage and being well on the way to resembling something like the age-old British stereotype of success.
And, partly because demand for rented properties is so high, we are already spending more of our income than ever on rent as it is. According to the most recent figures from the English Housing Survey, rents in England are almost half of tenants’ average take-home pay.
In London, the picture is pretty bleak. The average amount that a London renter shells out on rent each month is equal to 60% of their gross earnings with housing benefit, or 72% without it. That’s before you’ve even left the house, paid a bill or cooked that Sainsbury’s Basics salmon.
Of course, London is the epicentre of this crisis, the eye of the storm, but across the country the picture isn’t much better. Throughout England the survey found that private renters spent 43% of their national average gross income, including housing benefit, while those not in receipt of housing benefit were typically shelling out 52% of their earnings.
The RICS has warned today that at the end of the next five years, tenants could find themselves having to pay at least 25% more than they currently do.
Simon Rubinsohn, chief economist of RICS, told the BBC that he blamed the government’s recent moves to discourage buy-to-let landlords,
‘In the long run, I’m concerned that rents might increase rapidly,’ he said.
‘Critically our principal concerns with the measures announced by the government is that they are overly focused on promoting home ownership, at the expense of all other tenures,’ he added.
Basically, by discouraging buy-to-let landlords, the government could cause the already limited number of private rents to take even more strain.
As things stand, we’re in a real bind. Successive governments have failed to build enough houses for our growing population and now more people than ever before rent, because while house prices have soared, wages haven’t exactly done the same.
Schemes like Help To Buy are all very well and good but nothing is really being done to address the fact that the growing numbers of people who do rent are not protected: we don’t have rent control in this country, your landlord can put up your rent at any point during your tenancy if they want to, and estate agents’ fees often border on extortion.
Rents are already high, but as they get higher it will become more and more difficult for people to save for a deposit while they’re renting, meaning that they get trapped. As we reported yesterday, it could take you 24 years to save up for a deposit the way things are going.
Matt Hutchinson of spareroom.co.uk told the Debrief, ‘Despite this government}s single-minded focus on home ownership as the solution to the housing crisis, the number of people renting is on the up. With rents having risen steadily over the past five years, and wages struggling to keep up, affordability has become a serious issue.
‘Recently announced measures to curb the buy-to-let market may well end up making things worse. With a sector mostly made up of small investors, it’s likely the cost of any legislative change will simply be passed on to tenants, many of whom are already struggling.’
He added, ‘The truth is, renting doesn’t have to be a second-rate option, but, as things stand in the UK, it often is. We need to make sure we have enough affordable housing of all types – owned, rented and shared – so people can choose whatever suits their current circumstances.
‘We spend far too much time worrying about who owns our homes and not enough time enjoying them.’
Until we can build a substantial number of new affordable houses, enough to actually make a difference, what we need is this: a serious national conversation about the rental market; the fact that today’s young people may well be renting later in life, even once they’ve had families and need stability; overhauling renter’s rights, perhaps bringing in rent controls of some sort; and sorting out the unregulated sham that is agency fees.
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