Proactive Investors - Facing consistently surging rental prices and wages that are failing to keep up with inflation, Britain’s younger generations are becoming increasingly squeezed out of the housing market.
Private rental prices in the UK rose by 6.1% in the 12 months to October 2023, marking the largest annual percentage change on record since the Office of National Statistics began tracking private rent prices.
Wales experienced the highest increase among the UK countries, with a 6.9% rise, maintaining its rate from September 2023.
Notably, private sector measures like Homelet reported even higher rates for new tenancies in Wales, peaking at 11.0% in March 2023.
Within England, London had the highest annual percentage change in private rental prices at 6.8%, marking the highest annual percentage change since the London data series began in January 2006.
Scotland saw a 6.2% increase, the highest since its data series began in January 2012.
This comes despite the introduction of the Cost of Living (Tenant Protection) Scotland Act in 2022, which capped in-tenancy rental price increases. The overall rise reflects high inflation for new lets, according to the data.
The ONS described a classic economic scenario where demand for rental properties outstrips supply, leading to higher prices.
Additionally, as the economy recovers from the COVID-19 pandemic, increased employment and income levels may be enabling more people to afford higher rents.
Unfortunately for those reaching for the first rung of the property ladder, rental prices are expected to increase by another 4% on average across the UK over the next 12 months.
At the same time as record rents, the average UK house price fell by 0.1% in the 12 months to September 2023, marking the first annual drop since 2012.
Earlier this month, Sarah Coles, head of personal finance at Hargreaves Lansdown (LON:HRGV), called the ongoing rent rises “devastating”.
She said: “Taking the leap from renting to buying is harder than ever. Rising rents make it harder to free up cash to save, while much higher house prices mean we’re aiming for much larger deposits.
Read more on Proactive Investors UK
