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UK Rent Falls by £5 Billion in 3 Years
In the face of soaring rental prices, the total amount of rent paid across the UK plummeted by over £5 billion over since 2018. The loss has been attributed to a reluctance to move shown by Generation Z, whilst an increasing number of millennials have secured footing on the housing ladder.
Research carried out by Hamptons has shown the total rent paid reached a peak of £62.4 billion in 2018, before more recently scraping by at £57.3 billion in 2021, a fall of 8%.
With the generation being likely to have paid more in rent that any other before them, the millennial demographic contributes 42% of the nation’s rental payments, down from the peak of 55% seen in 2016.
As can be expected with ageing millennials now starting to leave the rental market in search of their own property, the total amount of rent the generation are paying is falling, with estimates on the amount of rent exclusively paid by millennials over the course of 2021 being cast at £24 billion, 28% lower than the 2017 total.
Hamptons also note that whilst previous declines in the nations rental expenditure have been quick to rally as a new generation enters the rental market, this trend has been upturned by Generation Z who are choosing to stay at home with their parents.
With members of generation Z being an average of 16 years younger than their millennial counterparts, although the total amount of rent they pay is climbing at a slower rate than older renters, the total amount of rent paid by Gen Z doubled between 2020 and 2021, realising figures of £1.8 billion and £3.6 billion respectively.
Hampton’s head of research, Aneisha Beveridge commented, “Leaving home in the middle of a financial crisis, like most millennials did over a decade ago, made buying a home difficult.
‘We expect millennials’ collective rental bill to continue dropping sharply for the next couple of years, before flattening out as those who want, or are able to buy, have already done so.’
Why Is Rent So High?
The amount landlords have requested their tenants pay to rent their properties in the UK has been on the rise over the last 12 months. August saw another rise in the average cost of rent, increasing by 7.4%, or £75, when compared to the same month in the previous year.
In spite of rents initially falling as the nation was plunged into lockdown, rents outside the capital of London have been seeing phenomenal gains, with the cost of renting growing by a staggering 13.9% and 12.8% across the South West and South East of England respectively.
This surge in rental costs shows the fastest rate of growth in the last 13 years, with souring demand for a dwindling supply or rental properties, as many look to head back to life in the city appear to be the main driving force behind the recent increases.
Millennials Renting vs Buying
When determining why renting has become so popular amongst millennials, may have pointed towards the great recession, a struggling labour market and increased student debt. These arguments have stated that with the burden of repaying student loans and ever-increasing tuition fees, the often-smaller monthly payments offered when renting are more suited to a millennials budget.
Back in 2018 predictions made by a government thinktank stated around 14 million millennials would be renting into their 40’s, with a third of the demographic potentially still renting when they come of age to claim their pension.
What Is a Fair Rent Increase?
Providing that the landlord has not included a rent review clause within the terms of the tenancy agreement, they will typically need the residents of the rental property to agree to any changes to the amount they are expected to pay in rent; requiring both parties to sign a new tenancy agreement.
However, the landlord is also prevented from simply increasing the amount the tenants are required to pay in rent to any figure that they see fit, and any increase must be in line with average rent charges in the area. Commonly, landlords will only seek to increase the rent by around 3% each year.
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