UK tenants facing double-digit squeeze in rents, outpacing pay

London: United Kingdom tenants are facing a double-digit surge in rental costs in the coming years as rocketing interest rates and demand for property makes securing a home more difficult.

Analysis by the Resolution Foundation found that average rents may rise by 13 per cent over the next three years, compounding a cost-of-living crisis for Britain’s growing number of tenants. The growth in rental costs will be much faster than the expected earnings growth over the period, it warned.

The analysis suggests more strain on the finances of many Britons even as inflation falls rapidly towards the Bank of England’s 2 per cent target. UK renters are concentrated among younger generations and face a further squeeze because high market rates for new tenancies point to higher costs when leases come up for renewal.

Resolution said the cost of new tenancies has grown by almost a fifth since the start of 2022, while the supply of rental homes coming onto the market is well below pre-pandemic levels.

“Those rises for new tenancies are starting to slow, but how much renters actually pay will continue to outgrow how much they earn for some years to come as those not yet exposed to higher prices are hit,” said Cara Pacitti, senior economist at the Resolution Foundation.

Britain’s housing crisis is one of the top issues for younger voters ahead of a general election expected later this year. Official data shows rents rising at their fastest pace on record in the UK. In London, many tenants cannot afford the deposit to get a foot on the housing ladder.