Rent saw a rise of 4% last year as landlords facing a mortgage rate spike, delegated those costs.
The Office for National Statistics (ONS) report a quarter of tenants surveyed in December 2022 saw an increase in rent in the last six months.
In proportion to homeowners, renters spend 8% more of their weekly expenses on housing. (In accordance with the most recent 2021 figures.)
On the 10th of January, a senior personal finance analyst at Interactive Investor told the public this;
“Rent rise has been accompanied by higher energy bills which continue to squeeze budgets”. He said looking for new tenancy is a “tricky situation”. Renters could choose to stay with existing tenancy agreements where rent is fixed, rather than risk spending more on rent.
However, the price of owning a home could rise significantly this year. The average cost of a new, two-year fixed-rate mortgage has reduced gradually since markets stabilised. However, it is still far higher than it was the previous year at 5.78%.
The ONS has reported several thousand homeowners are going to be hit with severely higher mortgages. This will be when their current fixed-rate deals expire. ONS figures say that over 1.4 million renewals are set to happen in 2023. With the majority of those happening between April and June.
Figures also state 57% of these homeowners currently pay less than 2%. The average house price in the UK is £300,000 and an increase in interest rates from 2% to 6% would cause monthly repayments to jump by £661.
What can you do?
- With escalating rents, the demand for properties is going to be significantly higher. Agents and landlords need to ensure that applicants are properly referenced, and that a guarantor (someone who agrees to pay the rent if the tenant doesn’t) is obtained where necessary.
- If landlords or agents want to make deductions from a deposit, to protect their interests, an independent checkout should be carried out and sufficient evidence supplied to show entitlement to the deposit.
- Landlords should consider taking out insurance. If tenants are unable to find alternative accommodation, then court proceedings to evict can be quite expensive, particularly if they become defended.
- Everyone is feeling the pinch at the moment and so we recommended that landlords open the lines of communication with the tenant and try and reach an amicable agreement. If tenants fall behind on rent this could include payment plans to get back on track.
- If the matter cannot be resolved out of court, then we can assist through the eviction process. We also offer a notice-checking service to confirm validity for any landlords or agents that have concerns and want peace of mind their notices are valid. We are still seeing about 70-80% of notices are invalid.