Private rental prices paid by tenants rose by 5.5% in the 12 months to August 2023, up from 5.3% in the 12 months to July 2023, according to data from the Office for National Statistics (ONS).
Annual private rental prices increased by 5.4% in England, 6.5% in Wales, and 6.0% in Scotland in the 12 months to August.
Within England, London had the highest annual percentage change at 5.9%, while the North East and South West saw the lowest (4.8%).
London’s annual percentage change in private rental prices was at its highest annual rate since the London data series began in January 2006.
In light of these findings, Newspage sought the views of property and mortgage experts – their responses are below.
Reaction:
Graham Cox, founder at Self Employed Mortgage Hub:
“Rents continue to surge to astronomical levels, driven by a mass exodus of landlords from the private rented sector, a lack of social housing and unaffordable house prices.
“What a mess. This is the result of years of not just a lack of strategic housing policy but a lack of care from this government for its population.”
Craig Fish, director at Lodestone Mortgages & Protection:
“Unfortunately, this situation is only going to worsen as the months go by and landlords who have to review their mortgages realise that the rent they have been charging simply doesn’t make the numbers work.
“Whilst we are currently seeing lenders reducing rates, they are still much higher than landlords have been used to and so this cycle is only going to continue.
“Sadly, the tenants are the ones who ultimately pay the price.”
Kundan Bhaduri, property developer and portfolio landlord at The Kushman Group:
“As the exodus of landlords gains momentum, Britain is at risk of losing the heart and soul of the private rental market.
“Individuals who invested their hard-earned money to provide housing to thousands are now forced to weigh the risks against the rewards, often with a heavy heart.
“This isn’t just a struggle against the odds, it’s a fight to preserve the very system that has served the public over the past 25 to 30 years.
“The bonds built between landlords and tenants, the trust formed over years of mutual respect, and the symbiotic relationship that lies at the heart of the rental market, are now at risk.
“Landlords aren’t mere property owners, they are the custodians of dreams, creators of homes, and the pillars of a functioning society that has relied on private money to house the millions.
“The burden of red tape and rising interest rates is a threat not just to landlords but to tenants and the housing market as a whole. Policymakers and the Government need to take note.”
Peter Stamford, director and lead adviser at Moor Mortgages:
“The ongoing surge in private rental prices is not surprising in the slightest.
“Mortgage rate increases imposed on landlords need to be passed on to tenants otherwise the loans become unworkable.
“This is sadly the fallout from endless rate rises.”
Scott Taylor-Barr, financial adviser at Barnsdale Financial Management:
“With the relentless march upwards in interest rates, many landlords will have found themselves in a position of having to look at increasing rents in line with their cost of borrowing.
“After all, they are businesses and the idea of owning a property was for it to make them money, not cost them to own it.
“Unlike those who own their homes, however, as mortgage rates fall in the future it is unlikely that landlords will then pass on the savings made to their tenants, meaning these increased rents become “baked in” and become the new market level.”
James Miller, founder at Clean Break Properties:
“The increase in rental prices is likely just the beginning as more and more landlords look at higher cash-flowing models like houses of multiple occupancy (HMO) and serviced accommodation and holiday lets in order to protect their investment and cover their liability after a squeeze in their margins due to higher mortgage rates.
“Article 4 legislation will restrict the increase in HMOs but there is currently no restriction on holiday lets, meaning more and more people will pursue this strategy, further reducing available rental stock and pushing up rental prices further.”
Steven Hargreaves, mortgage and protection adviser at The Mortgage Co:
“I do not think a large increase in rental prices is a surprise when mortgage rates increase.
“If a landlord has a mortgage on the property, rate increases will get passed down the line to tenants.
“Buy-to-let mortgages have increased from under 3% two years ago to over 6% more recently, which has had a dramatic effect on landlords’ yields.
“With a shortage of quality rented properties, and huge demand, this was always going to increase rental prices. Interest rate increasing has forced many would-be first-time buyers to rent rather than buy.
“My daughter recently went to a London university, and the properties for rent in the areas she was looking were being snapped up within hours of coming onto the market, not giving us time to view.
“We had to pay six months upfront and a large bond to secure the property. We actually went to view the property the week after we had signed up for it and put the bond down.”
Ross McMillan, owner and mortgage adviser at Blue Fish Mortgage Solutions:
“So, the Scottish government ignores or dismisses all professional opinion and expertise in favour of blind dogma, tries to manipulate, manage and target the private rental market to cover up for its long-term deficiencies in housing strategy and funnily enough rents rise in Scotland to amongst the highest in the UK and with the highest level of annual increase since 2012.
“Alongside substantial increases in costs, the current government imposition of such things as rent caps, eviction moratoriums and arduous regulations continues to drive more and more landlords from the sector and whilst this pattern of events continues it is inevitable that renters will be the long-term losers in this battle as supply restricts further and basic market forces mean rents continue to rocket.
“Wishful thinking perhaps but, unless those currently in power recognise the damage the ideological warfare they have chosen to undertake is having, the housing crisis in Scotland will only worsen.”
