Rental and mortgage housing costs continue to rise

The Office for National Statistics (ONS) has released the latest private rent and house price data which shows that private rents increased by 8.7% in the year to October, to an average of £1,307.

In England, rent inflation was highest in London at 10.4% and lowest in Yorkshire and The Humber at 5.9%. Whilst the average house price across the UK increased by 2.9% in the year to September, to £291,828. The average price for first-time buyers hit £259,000.

ONS Head of Housing Market Indices, Aimee North said “Annual house price growth rose again this month, with annual rises across every nation and region, apart from London.

“Meanwhile rental prices increased in the year to October, but still remain below March’s record high annual growth. London once again had the strongest annual growth, with the lowest increase in Yorkshire and the Humber.”

Sarah Coles, Head of Personal Finance at Hargreaves Lansdown said “Renters are stuck in an endless cycle of rising costs. It’s forcing more to consider living somewhere smaller, in a worse area, or further from work, in order to make ends meet. Meanwhile others are considering moving back into shared accommodation. The immediate future looks tough enough, as rents continue to spiral, but what’s worse is that there’s no clear signal that this is ever going to end.

“Landlords are still leaving the market, and the Budget made things even worse, with a higher stamp duty surcharge loaded on top of frozen income tax thresholds, stricter legislation and higher mortgage rates. The RICS residential market survey for October showed the most negative figure for new rental properties coming to market since the end of 2021.

“As a result, getting good news about your rent is about as common as discovering your housemates have washed up for you, or your landlord suggesting you get a dog.

“It means for many, the only way out of the endless cycle of rising costs is to buy, but this is far easier said than done when rents absorb so much of your income. The HL Savings & Resilience Barometer found that renters spend an average of 36% of their household income on essential housing costs – including the rent, council tax and energy bills. It means it’s difficult to cover the rest of their everyday costs – let alone save for a deposit. They need all the help they can get, whether that’s from family helping out or taking advantage of free money from the government through a Lifetime ISA.”

Richard Lane, Chief Client Officer at StepChange said “While the new Renters’ Rights Bill will certainly improve protections for private renters, today’s data from the ONS, alongside our latest research, clearly indicate the financial pressure that tenants are under. Private rental prices continue to rise well above inflation, with more and more renters falling behind on bills or relying on credit as a result.

“With such low financial resilience among private renters, one financial setback could quickly knock someone into the red with their rent. Even under this new Bill, there are few protections to protect someone in this situation from eviction.

“We’d like to see the Bill amended to provide for judicial discretion for eviction on the grounds of rent arrears, supported by the introduction of a Tenancy Support Duty. By putting the power in a judge’s hands, this would also rebalance rights between tenant and landlord.

“Landlords need to be able to recover their properties in exceptional circumstances, but it’s only fair that tenants struggling financially have the opportunity to get back on their feet before losing their home – a measure which is already law for the social rented and mortgage sector.”