MHHG estate agents

The UK rental market continues to experience rapid growth, posing risks for both tenants and landlords. There is a growing concern that tenants across the country may struggle to pay their rent. Landlords are urged to consider rent guarantee insurance to protect themselves from potential tenant arrears.

Average rent in July 2023 increased by 1.3%, reaching a new high of £1,229. Rents outside of London also saw a 1.1% increase, amounting to £1,027. Scotland experienced a strong 5.5% rise in the month, while the North East saw a slight fall of -1.1%.

Renters are spending an increased proportion of their income on rent, with rent affordability reaching its highest level since June 2018. Only the North East and Scotland saw renters paying less of their income on rent compared to the previous year.

The UK rental market currently seems to favor landlords, as demand surpasses supply, leading to competition among tenants and offering rents well above the market rate. However, rising interest rates have resulted in higher mortgage payments for landlords, prompting many to consider selling their properties to avoid the risk of tenant arrears caused by the cost-of-living crisis.

A survey indicates that 49% of adults in the UK are worried about being able to pay their rent in 2023. Londoners already spend an average of 40% of their income on rent alone. Landlords, on the other hand, face challenges due to rising interest rates that have increased the cost of mortgages. Many landlords are considering selling their properties to minimize risk.

Private landlords play a crucial role in ensuring an adequate supply of rental homes to meet rising demand, especially as the number of council homes has declined. Property investment has been viewed as a long-term investment prospect, providing a source of retirement funds for many landlords. However, landlords are not automatically wealthy and often own only one or a few rental properties.

The number of buy-to-let mortgages has been on an upward trend, but anecdotal evidence suggests that many landlords are looking to sell their properties. Rising interest rates and increased financial pressures have led landlords to consider the sale of their properties. However, some landlords are capitalizing on high demand and expanding their property portfolios.

The UK rental market is being squeezed by a combination of rising rents, unscrupulous landlords taking advantage of high demand, and skyrocketing mortgage rates and energy bills. Renters are facing affordability challenges, with many trapped in unaffordable or substandard housing, forced to move away from their jobs and childhood neighborhoods. Some are even facing homelessness and debt collectors.

Overall, tenants are currently facing more significant challenges in the rental market compared to landlords. While landlords may face financial difficulties and potential losses, tenants bear higher stakes, including health risks, displacement, and financial distress.