British renters are facing a grim future as a new report warns of a potential surge in rents by as much as 13 per cent over the next three years. The Resolution Foundation’s research highlights the growing disparity between rent increases and earnings, with renters set to bear the brunt of the housing crisis.
Despite recent spikes in new tenancy rent levels, the report suggests that the current high market rates are still working their way through existing tenancies. The main drivers behind the surge in rents are attributed to the post-pandemic bounce-back and fast-rising wages, which have historically tracked alongside rent prices.
While the report acknowledges that the recent surge in rental prices is a correction from the pandemic-induced dip, it warns that renters will continue to face significant housing cost rises in the coming years. The Foundation predicts that rents for new tenancies have already begun to cool, but existing tenants may still face large rent hikes as the market adjusts.
Ben Twomey, Chief Executive of Generation Rent, expressed concerns over the impact of rising rents on tenants’ ability to save for the future and maintain a decent standard of living. He called on the government to take action to prevent landlords from raising rents beyond what tenants can afford.
The report also sheds light on the changing demographics of private renters, with an increasing number of families relying on the private rented sector. Ben Beadle, Chief Executive of the National Residential Landlords Association, emphasized the need for pro-growth tax measures to address the imbalance between rental supply and demand.
As the debate around the factors driving the rent surge continues, the Foundation refuted claims that rising interest rates and tougher regulations have significantly impacted the rental market. The report suggests that landlords’ ability to pass on higher costs to tenants is limited by market dynamics, rather than individual decisions.
With millions of families facing surging rents and the prospect of continued rent increases outpacing earnings, policymakers are urged to implement bold solutions to address the housing crisis. Short-term measures such as uprating Local Housing Allowance and long-term solutions like building more homes are proposed as potential remedies to the growing rent affordability issue.
In response to the report, a UK government spokesperson highlighted the Renters (Reform) Bill as a step towards providing more security for renters and combating poor practices in the rental market. The government also reiterated its commitment to investing in affordable housing and supporting households with rising costs through various financial assistance programs.
As British renters brace for a challenging future, the debate around housing affordability and rental market dynamics continues to intensify, with calls for decisive action to address the widening gap between rent prices and earnings.