5 Reasons Why House Rent Prices Are So High in the UK

Are you out there seeking a space to rent in the UK? If so, then you’ve likely discovered that the cost of house rent has increased dramatically as compared with other years. You may have any number of different, idealized scenarios in mind: staying in the big cities of London or staying in quieter, smaller suburbs. Whatever your expectations, there is no denying this simple fact: renters’ costs keep rising for house to rent Oldham.

The Imbalance of Supply and Demand

One of the major factors responsible for such rapid hikes in house rent prices in the UK is the imbalance between the supply and demand of such property. There are simply not enough rental properties available to meet growing demand. More people are moving to urban areas in search of employment and education, thereby increasing the prices of rental property.

Britain has long suffered a housing shortage, with new property build rates lagging behind population growth. Under these circumstances, landlords can command higher rents because they know there are many tenants willing to fight over fewer homes.

Increasing Inflation and Cost of Living

In the UK, the overall cost of living has been increasing and inflationary pressure spilled over into the rental market. Since landlords’ maintenance costs, repair expenses, and property taxes have been increasing, they tend to pass on such hikes to tenants in terms of more money to pay in rent. Higher utility bill prices and general expenses have also made it expensive to run rental properties.

Besides the rising prices, inflation also compromises tenants’ purchasing power. This makes it hard for people to save sufficient money to get into their houses. Therefore, rentals emerge as the demanded commodity, causing increased costs.

How do Increased Utility Bills Affect Rental Prices?

• Rising fuel and energy prices influence property management costs.
• Taxes and insurance cost landlords a lot of money.
• Maintenance and repair costs have shot up to affect the overall rentals.

Increasing City Life

There is currently a huge demand for city living, especially in major UK cities like London, Manchester, and Birmingham. People mostly prefer the luxury and convenience experienced in these urban environments since they are in a position to visit workplaces with better work opportunities, entertainment facilities, and public transport. However, this surging demand has made the cost of rentals in city centres rocket high.

While rising rents are not an urban phenomenon, and rural regions are experiencing them too, more dramatic increases have occurred in hotspots of urban habitation. Given that demand for rental properties is high in locales near workplaces, universities, or other desirable amenities, landlords can increase their rental rates, especially for well-placed apartments or houses.

Regulatory and Tax Changes to Landlords

Recent regulatory and tax regime changes in the UK have made it difficult to carry out and expensive for landlords to run their businesses, thus raising rents. In the last two years, the UK government has introduced some of the strongest regulations around rental properties, including measures on energy efficiency and stronger tenant protections.

Besides, tax relief rule changes have led to the reduction of mortgage interest tax relief. Due to this change, costs to the landlords have increased. As a result, most have raised the price payable to them to cover costs resulting from such additional costs. New regulations, including the Tenant Fees Act, have affected the procedure followed by landlords in recovering costs, which is higher rent paid monthly.

Brexit and Economic Uncertainty

Another factor that has resulted in high rental prices is the uncertainty associated with the economic outlook following the Brexit decision. Uncertainty regarding the future UK housing market has compelled many property developers to slow down construction work. This would even make the shortage of houses worse due to the reduced availability of new rental homes.

Besides, the devaluation of the pound is making UK property more attractive to foreign investors. That increased the demand for property. The more investors buy to let rather than to live in, the more the increased demand causes prices to go higher, especially around prime locations with regard to rent.

FAQs

1. Why are house rent rising faster than wages in the UK?

Rents have risen dramatically, mainly due to a shortage of rental properties and increased demand, while wage growth lags far behind growth in the cost of living.

2. Can the government do anything to knock the price tag down?

Rent controls and incentives for constructing affordable housing are government responses that can be helpful, although their implementation may take quite some time, and the effect on the market is rather ambiguous.

3. Is renting more costly than buying a home in the UK?

For most people, the cost of paying rent may be more expensive every month compared to mortgage payments. However, high property prices and significant deposits are required by most people in many cases, so it is expensive for most people to buy homes.

4. How is the cost of living crisis driving up housing rents?

This cost of living crisis, with inflation and utility costs also spiking, further squeezes the profits of the landlords, who often charge the increasing costs back to the tenants in the form of higher rents.

5. Is the UK going to See a Drop in Rent Prices Anytime Soon?

Bottom Line: In short, it is hard to predict, but it is not likely that rents are going to decrease dramatically anytime soon unless supply becomes much higher through increases in rental units or some significant shift in economic condition.