Rent in Britain is expected to rise at a faster rate than wage growth, with the Resolution Foundation forecasting a 13% increase in average rents over the next three years. This surge in rental costs comes after a period of record growth following the Covid pandemic and the cost of living crisis.
The thinktank predicts annual rent growth of 4.2% through 2027, outpacing the predicted 7.5% growth in average workers’ earnings over the same period. This has led to concerns about added pressure on households, particularly as new tenants are already facing higher monthly outgoings.
The report highlights a surge in new tenancy rent levels, with rents up almost a fifth over the past two years. The rise in rental costs has impacted more households, with an increased number of families living in private rented accommodation headed by individuals aged 30-49.
While rental cost growth has slowed slightly since the pandemic, the thinktank warns that it may take years for this burst to work through the entire private rental sector. This could result in large rent increases for existing tenants reaching the end of their tenancies.
The main factors driving up rental costs are the bounceback from Covid lockdowns and fast-rising wages. The report dismisses concerns about landlords leaving the sector due to higher interest rates and tougher regulations, citing minimal impact on the overall market.
In response to the findings, the government has emphasized its support for households facing the cost of living crisis. It plans to implement reforms to increase protections for renters and invest in affordable housing programs to address the rising demand for rental properties.
Source
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