The recent news that the cost of a large cod and chips could reach £13 is just the latest in a long list of escalating prices.
While the tabloids might have taken a light-hearted approach to chippies being ‘battered’ by growing costs, the increases in fuel, gas and electricity are a serious matter and will be felt in all corners – not least by those renting.
As is the case with house prices, rental prices continue to move upwards, meaning tenants potentially face a double whammy of rising utility bills and rents.
The latest Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS) shows 55% of respondents saw an increase in demand from tenants in February.
At the same time, a net balance of -21% reported a drop in rental properties, compared to -13% in January. More than half, 66%, believe that rental prices will continue to rise. This is the highest reading since December 2012.
Renters find themselves in a precarious position. For those looking to make their first move onto the property ladder, the recent report from Nationwide Building Society showing house prices increased by 14.3% in the last twelve months will have been a bitter blow.
Renters used to be able to console themselves with the fact that renting was cheaper than buying, yet those days are gone – for the foreseeable future at least.
Recent analysis from Halifax shows the monthly housing costs for first-time buyers are now £115 – 13% – lower than the cost of renting an equivalent home.
Its Buying vs Renting Review is based on the housing costs associated with a mortgage on a three-bed home, compared to the average monthly rent of the same property type.
Last year, monthly rental costs grew by 6% to £874, while buying costs grew just 2% to £759, a monthly difference of £115, or £1,378 for the full year. The gap is now at its widest since 2017.
There are flickers of hope on the horizon though. It is worth noting that while Zoopla data shows UK rents increased 8.3% in Q4 2021, some of the increase can be attributed to a catch-up in the rental reductions the market experienced during Covid.
Indeed, the overall increase over the last five years totals just 12%, according to Zoopla.
Its figures show the average rent now accounts for 37% of gross income for a single earner. While this is up from a pandemic dip of 34% during 2021, it is still broadly in line with the 10-year average of 36%.
Meanwhile, Hamptons is predicting a slowdown in the rate of rental growth this year – something the estate agent is already experiencing in certain pockets of the UK. Its analysis shows the average cost of a newly-let property rose 6.7% in February compared to the same month last year.
Yet this marks a slight fall from the annual growth of 7% seen in January and a peak of 8.7% recorded in July 2021. It expects this year’s rental growth to slow from around 7% today to 2.5% by the end of the year.
Looking ahead, as landlords look to offset the cost of upgrading their properties to meet the Energy Performance Certificate (EPC) requirements, we could see further pressure on rents.
Yet as workers return to cities and confidence grows around London house prices, this should help ease pressures on supply and help curb rental prices. There will also come a point when affordability will act as a barrier to rising rents.
So, while we might have to look hard to find them, there are glimmers of hope for those in the rental market.
Simon Jackson is managing director of SDL Surveying