Rents to grow four times faster than house prices over next four years

Rising interest rates have hit renters harder than homeowners, new research has suggested.

The estate agent Hamptons’ autumn housing market forecast shows the average rent on a newly-let property in Britain increased 9.9% in July compared with the previous month.

Despite cost-of-living pressures, renters are often agreeing to double-digit rises when moving home because they feel they have no other choice.

Why are rents rising so fast?

Rising interest rates mean the cost of buy-to-let mortgages has increased. Nearly 70% of landlords have a mortgage or some form of borrowing. The majority of these are on interest-only deals. This means if the interest rate doubles, so do their repayments.

Extending the term of a mortgage makes no difference if you’re on an interest-only deal. For the average landlord, who tends to be at the older end of the spectrum, this wouldn’t be an option anyway.

As a result, landlords are either leaving the business or passing on rising costs to their tenants. This is causing an increase in rents that looks set to continue for the foreseeable future.

How much more will rents rise?

Hamptons predicts that rents will rise 25% between 2023 and 2026, more than four times the pace of house prices. It expects the most rapid pace of increase to occur in 2023 and 2024.

If you’re struggling

If your landlord is looking to put your rent up, make sure you know your rights. Generally, they can only increase it once a year by a reasonable amount. Find more information on your rights and what to do if you’re struggling to pay. 

Get budgeting tips and information on where to go for support if money worries are affecting your mental health in our blog on how to manage rising rents and mortgage interest rates. 

And use our free benefits calculator to check you’re not missing out government money you’re entitled to.

If you’re on a low income or claim benefits, you may also be able to get a council tax reduction. Check to see if you’re eligible.

And remember, local councils have been given a share of £842m to help families struggling with the cost-of-living crisis. Visit your local council’s website to see what’s available in your area.

Finally, if you need free debt advice, we're here 24/7 online, or you can give us a call seven days a week during our office opening hours. You may be surprised at the range of support that's available. Get in touch today.