Tenants Face Rising Rents and Housing Insecurity
Tenants, who are predominantly young people, have experienced a significant increase in rents, with a rise of 5.1% in the year leading up to June. This comes as almost one in three tenant households spend more than half of their income on rent, highlighting the growing issue of housing affordability.
The Shift from Homeownership to Renting
In recent years, there has been a notable shift from homeownership to renting. Renters now outnumber those who own their homes outright, with even fewer individuals paying off a home loan. This reversal of the situation a generation ago reflects a generational shift that was accelerated by the financial crisis in 2011.
As baby boomers and Generation X have paid off their mortgages, house prices have soared, making it increasingly difficult for their children to enter the housing market. Consequently, more people have been forced to rent, driving up demand and pushing prices higher. This has further hindered renters’ ability to save for a deposit to purchase their own homes. Additionally, as interest rates have risen, landlords have faced pressure to increase rental prices, exacerbating the issue of housing insecurity.
The Vulnerability of Renters
Renters, who are predominantly young individuals aged 16-34, are particularly vulnerable to increases in housing costs. According to Sky News analysis, rents have increased by 5.1% in the year leading up to June. During the same period, the number of available rental properties has declined by 19%, while the mismatch between supply and demand has grown by 57%, according to the Propertymark housing insights report.
Charity Shelter estimates that almost one in three tenant households spend more than half of their income on rent. Furthermore, over 2.5 million renters are in arrears or consistently struggling to pay their rent, representing a 45% increase since April of the previous year. The use of Section 21 orders, also known as no-fault evictions, has also surged, with over 6,000 such orders issued per quarter.
A Symptom of the Wider Housing Crisis
The challenges faced by renters are just one aspect of the broader housing crisis in the UK. Insufficient supply and soaring affordability are at the heart of this crisis. In 1997, the median house cost three-and-a-half times the median gross income. By last year, this ratio had increased to 8.3 times, with even higher leaps in London and the south-east, where the overheated market accounts for approximately half of all new mortgage business.
As house prices have risen, rents have also been driven up. The median monthly rent in the UK now stands at £825. While measures to support mortgage holders have been more overt, with bank bosses engaging in discussions with the chancellor, support for renters has been less apparent. Although the government published a white paper on the private rental sector over a year ago and introduced the Renters Reform bill to parliament, its passage has not been scheduled. This leaves tenants uncertain about the security of their homes, even if they can afford to pay their rent.
The housing crisis in the UK requires comprehensive action to address the issues of affordability, supply, and housing insecurity. Without adequate support for renters, the problem will only continue to worsen, impacting the lives of millions of individuals and families across the country.