The Office for National Statistics has issued new data on the changing cost of UK rental properties this morning. The key message is summarised in this chart:
Rent costs appear to have risen by around 5% in the past year.
There is some variation between the countries that make up the UK:
The Northern Ireland market appears to be an outlier.
But there are, in any case, good reasons to doubt the validity of the conclusions within this release. As the ONS themselves acknowledge, there are other views available on the actual rate of change in rents in the UK. They include this chart in their release:
As they note, the agencies preparing this data such as RightMove and Zoopla are looking at new lettings whereas the ONS is trying to look at all rentals, which will of course also include local authority lets. There is bound to be a significant difference between the two with the ONS data failing to reflect the current state of the market, which is the information that is really desired.
What is clear is that in the volatile new lettings market, which is dominated by the buy-to-let sector, rent increases are running at rates above the general rate of inflation.
There is, of course, only one organisation responsible for this. That is the Bank of England. By unnecessarily forcing up interest rates it has:
- Forced up landlords borrowing costs
- Forced landlords to increase their prices as a result
- Persuaded many landlords to sell up
- Reduced market supply of rental properties as a result
- Forced up market prices again as a result.
Who loses? These groups do:
- The young
- Those on low pay
- Those on benefits.
In the UK these are the groups who predominantly live in rental properties. They are also, of course, the most economically vulnerable in the UK, all of whom are going to be punished by the impact of Bank of England policy for some time to come since no fall in the new rates is likely.
Bank of England callousness is alive and well, and to be found squatting in the rental market.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
The top graph shows that rents have been advancing at more than the rate of inflation for the whole period in the UK. This really looks like a long term and painful supply problem, not a short term change due to interest rate rises which is too short a period of correlation to draw conclusions from imv.
No doubt you also agree it is too soon to decide what the imapct of the French Revolution was
Hint: a State that deters speculative residential building, taxes the profit out of second home ownership and within which rent is generally affordable
Even the somewhat better off are facing difficult decisions.
Some of my family-a couple in their forties-have to remortgage. They have a choice, it seems of a longer term deal with a lower rate or gamble on a shorter term deal but with a higher rate. If rates go down they can change but if not…!
I feel rates will fall but not that much so can’t offer advice.
I am glad we have paid off the mortgage but I feel for younger people having to make those decisions.
The motive for increasing interest rates seems to be that the economy is overheating causing inflation. Reduce the amount of money people have prices will go down and we have a bit of beneficial recession. That nonsense is the message I get from the “experts” and mainstream journalists.
I don’t think the BoE want intentionally harm any section of society: they just don’t care. Most people seem to treat it all as a fact of life.
Of course BoE staff, politicians, journalists and financial experts are all quite well off so they don’t really have to think too hard about it all.
I agree. I wonder how anyone who lives in the real world can say the economy is overheating.
There are thousands of businesses -esp. in hospitality, who are are on the verge of going under. Shortage of labour, the need for employees to have more just to stay in the same place or not too far behind, energy bills and higher interest charges are all reasons. They need more spending to keep them afloat. The state could pay public employees what they are asking and they would spend much of that into the real economy. It would better than going onto recession.
You are spot on – this also applies to council/social housing.
In the social housing arena, we have to use use market valuations of rents and sale to set our rents at 80% market rent (a Tory policy from the 1990’s I believe, also endorsed by New Labour). Our rents are now touching the ceilings set by DHLUC thanks to the BoE.
So much for joined up thinking? Or is is intentional? Let’s unpick this a bit more shall we?
When we apply for social housing grant, we also do rent conversions of the old ‘social rent’ to 80% market rent as part of the deal. So tenants even in existing homes are now subsidising the other tenants new homes more. Sick or what? More subsidy from the user (who, because they rent must be in the eyes of our politicians losers) – less pay out for government – the people who should actually be paying for new housing.
This is more like banker thinking don’t you think, not social security thinking, its the banker mindset of ‘They must pay – debts/bills must be settled’?
We are also still in the era of regressive rent caps in via Universal Credit, so as the rents creep up, the housing part of UC is being squeezed and pushed down even now as kicked off in 2010.
In my LA, 69% of tenants are in receipt of benefits – a mixture 100% HB/UC paid for those at the absolute bottom and those who get some sort of help. Imagine what is happening to those working poor who only get a certain amount of HB/UC towards their rent?
This is why in a previous post I told you about how in the LA sector, we were effectively warehousing those in rent arrears as it works out as too expensive to evict them.
But also, imagine what pressure and cash flow issues this must be causing to LA Housing Revenue Accounts which are now under the Tories the sole responsibility of the LA (Government will not come to the rescue)? So, the light touch impact on evictions could lead to crises in the HRA, and could lead to LA’s having to liquidate HRA assets (homes) to prop up income shortfalls or stop developing new homes.
And what did you say Richard? Callous? That’s just the half of it. It’s also cunning – the cunning of Osbourne and his snakes and ladder ‘triple lock’ policies is still alive.
And Stymied/Sir Kid Starver seems to think that is OK, apparently.
In your excellent book ‘The Courageous State’, to me you point out the only REAL deficit in Britain’s politics – the deficit of courage (and vision).
And along with price inflation, we have the increasing ongoing inflation of political cowardice.
Thanks PSR
You add real colur to this in that comment
Thank you.
It’s the least I can do.
How many MPs are landlords?
How many MPs want rents to increase?
This is from last year.
More than 100 MPs are earning at least £2.6m a year between them from renting out properties, new research has found.
Analysis of a snapshot of parliamentary disclosures from September 2021 by Transparency International UK shows that at least 312 residential properties are owned by 177 MPs (27 per cent of all MPs) in addition to the homes that they, or close family members, live in.
https://inews.co.uk/news/politics/mps-earnings-renting-out-properties-research-1722252
I was thinking recently that the mortgage crisis news really did highlight just how neglected are those who have to rent. There has been no media hype about helping renters. Buy to Let Landlords, yes, even Labour seem to be up for that one, but those at the sharp end, renters, nothing. No help for them.
There is something else. IR’s and Mortgage rates will settle and go down at some point in the next 12 months, the Tories will see to that. They have to because IR’s and mortgage rates still going up in the run up to an election would be electoral suicide for them. They would be wiped out. So, at some point in the next year or so, mortgage holders should see some relief. Tough for them now I know, but there should be the prospect of lower IR’s to come. However, I can safely predict that rents will not come down. Renters will get no relief. I’ve never, ever, known Landlords to reduce their rents for their tenants when they are benefiting from lower mortgage rates. Just doesn’t happen! Higher rents once they go up are usually here to stay. It gets baked into the cake for landlords. Renters are just a walking cash machine for them.
The BoE do have a lot to answer for and I agree with everything said, however, I do think Tory policy and Labour as well over the last forty years are ultimately responsible for the crisis we now face. The issue again is affordability, especially affordable housing to rent, which is usually the first step on the real housing ladder for most people. The Tories will do nothing to solve it and I have no faith in Labour either. It requires major planning and a long term conviction to resolve it. Labour had that in 1945, today its difficult to know what they believe in other than a continuation of the Tory blueprint. Starmer does not inspire hope and neither does Reeves. It’s a depressing reflection on the current state of British politics that the choice we have is more of the same.
I agree with you