Pity the nation’s renters
Houses are still too expensive for them to buy (and the banks will no longer give them the finance to do so). Meanwhile, rents are rising far above the rate of inflation.
This chart from HomeLet, a credit reference firm, shows the average rental price across the UK, based on its own data:
That’s a considerable squeeze on tenants over the past two years. Average rents are up around 7% on this time last year. Average salaries have increased by 2.5% in that time.
And the situation in London is even more painful for renters, as this chart shows:
The average London rent is now more than £1,200 a month. That’s a brutal 12% rise on this time last year.
There’s some other depressing facts in the HomeLet research. It found that the average tenancy length in the capital has dropped from 27 months to 22 months. As anyone who has ever rented will know, there’s massive expense in moving to another property. Plus landlords use new tenants as an opportunity to push up rents. So shorter tenancies are another source of financial pain.
The research also confirms that it is primarily relatively young people in the capital who are being penalised by soaring rents. The average age of tenants in London is 30.5.
So what’s going on here? Why is renting getting more expensive when interest rates are being kept down by the Bank of England? One might expect low interest rates to benefit buy-to-let landlords meaning that they don’t have to raise rents to cover their mortgage costs.
The answer is that landlords are gouging tenants because they can. The demand for rental properties is high because young people cannot get the finance to buy. And there’s severe restrictions on the supply of new rental properties. Developers have stopped building because they are in financial trouble, or because they cannot get planning approval for new projects.
The Government wants to free up the planning laws, in part to allow more homes to be built to ease the pressure on the young. Yet there’s a backlash from people who don’t want new developments in their back yard.
Nimbyism, as always, is being dressed up as a concern for the countryside.
Perhaps those campaigning against more property development should be forced to meet those young Londoners who are beggaring themselves to keep a roof over their heads. Let them witness the consequences of their selfish behaviour.Tagged in: finance, housing, landlords, renting
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