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Are Rising Rents becoming too Disproportionate to Monthly Earnings?
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
HomeLet have released its most recent Rental Index and it is showing a slight increase in rental prices. Rents have increased by 2% in May, compared to the same month last year.
Looking at UK tenancies signed in May this year, the average rent agreed was £919 per calendar month, an increase on last month’s £918.
The increase is more so prominent when looking at year on year comparisons excluding London. The Average UK rental value in April was £763pcm, an increase of 1.3% on the same month last year.
Over the last year, rents in the UK have risen in 11 out of 12 regions included in HomeLet’s research. However, 5 of these regions saw a fall in rents from April 2018 to May 2018. These regions were Greater London, Scotland, the West Midlands, the East Midlands and the South West.
A new study by the General, Municipal and Boilermakers (GMB) Union has also looked at rent rises. It has revealed that the average of monthly rents have reached £1,500 in London. Meanwhile, the rest of the country has seen an 18.2% rise in average monthly rents between 2011 and 2017.
As you might expect, the GMB union have pointed out that the average rent rise in London is disproportionate to the rest of the country, showing an increase of 26%. The union has suggested that the real issue is that those struggling with such rent increases are suffering from employers failing to recognise these changes.
GMB London regional secretary Warren Kenny has said: “If employers don’t respond with higher pay they will face staff shortages as workers, especially younger people, are priced out of the housing market. It makes little sense for these workers to spend a full week at work only to pay most of their earnings in rents. There is no alternative to higher wages to pay these higher rents, plus a step change in building homes at reasonable rents.”
Such rent increases will be welcome news to landlords, especially since the recent turmoil with changes in tax relief, stamp duty and the Tenant Fees Ban.
If rents do continue to rise, it will be interesting to see if the average of monthly wages follows suit.
