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Rents Reach Record Highs Posted: 25th July 2022

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The latest figures show that across the rental market, tenants will have spent more than £63 billion in 2022 due to strong rental growth and new tenants joining the market. This means that tenants will have spent 2% more this year compared to 2021.

Due to rising rents, the rent paid by tenants as more than doubled since 2008 and this year’s figure will have exceeded the previous record set in 2017 when tenants paid £750m less in rent. In addition, there are more than £275,000 fewer private tenants than there were in 2017.

There has been a distinct shift in the rental market over the last decade, as rents for Generation Z (those born between 1997 and 2012) are projected to rise ten-fold compared to three years ago. Renters from Generation Z are expected to pay a fifth of all rents, amounting to £11.7bn, during the rest of this year which is more than three-fold year on year.

Millennials, those born between 1981-1996 paid 49% as much rent as they did in 2017 as more people in this generation bought rather than rented properties.  However, they are still expected to pay more rent than any other generation at £22.4nb which is an 18% rise on last year.

The average rent went up by 8.8% over the last year which is a slowdown in growth compared to 11.5% in May. The national average rent is currently £1,163 which is a rise from £1,069 one year ago.

Rents in London grew faster than anywhere else in the country, going up by 12.1% over the last year taking the average rent above £2,000 for the first time.

Millennials are still forecast to pay more rent than any other generation this year at £22.4bn, an 18% fall on last year, followed by Generation X (born between 1965 to 1980) who are projected to pay 19.6bn, a 5% decline on 2021.

Why are rents rising?

The rise in rents seems to be a result of the lack of homes available to rent and landlords passing on higher running costs and rising mortgage rates to their tenants. Insurance premiums and maintenance costs are higher and so landlords are looking to recoup these costs where they can.

For many renters, the cost of living, rising mortgage rates and rising inflation has put on hold any plans of home ownership. In addition, mortgage affordability is a barrier for many – something the government is looking to address.

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