Rising Rents Compound Energy Cost Crisis
For many in the UK, the goal of owning a home has gradually become a less realistic prospect over the past couple of years. The latest report from estate agency Hamptons has revealed that renting costs have shot up 12% in the year leading up to August 2023. This recent rent rise marks the highest increase since the survey began in 2014 and paints a concerning picture for renters nationwide.
According to the new research, a typical monthly rent for a newly-let property in the UK now stands at £1,304, a substantial jump over the past 12 months that surpasses the growth seen between 2015 and 2019.
Why are Rents Increasing?
A significant factor is the pressure that now rests on landlords. High mortgage rates are squeezing profit margins, prompting property owners to pass the burden on to their tenants. Unfortunately, this means renters are now taking the brunt of the damage caused by high interest.
Rising demand for rental properties has only exacerbated the cost crisis, with the prospect of property ownership still a distant dream for many. A supply and demand mismatch has had the expected effect, driving up prices.
Parliament has discussed new legislation to protect tenants, which will make it harder for landlords to evict tenants. While this would be a welcome development for renters, some landlords have expressed serious concerns and even decided to sell up. This decline in rental properties has contributed to the shortage, further inflating prices.
The Future of the Rental Market
As the rental market continues to break all the wrong records, there are concerns about its long-term sustainability. The pressure on landlords and tenants alike shows no sign of easing without significant changes. For tenants, the increasing cost of renting will hinder their ability to save to buy, continuing the cycle.
The broader housing market, including buyers and sellers, has also faced its fair share of challenges. Higher mortgage rates have slowed down activity in this sector. Property listings are seeing price cuts at levels not seen in over a decade, indicating that affordability issues are not limited to renters.
According to the property portal Rightmove, more than a third of properties listed for sale have had at least one price reduction to attract potential buyers. This figure is the highest recorded since January 2011.
The Link Between Rents and Energy Bills
As if the relentless rise in rental costs weren't challenging enough, soaring energy expenses have created a financial burden for many. Rent is usually the most substantial expense in a tenant’s monthly budget, leaving them limited flexibility to absorb extra costs.
Many renters are finding themselves forced to make difficult decisions and sacrifices. Some might opt for more affordable but less energy-efficient housing, which can result in higher energy costs. Others may cut back on essential expenses like heating their homes, leading to poor living conditions and health risks, especially during the winter.
The compounding effect of rising rents and escalating energy bills is pushing renters into financial strain, which can be very distressing for those on a low income.
Constantly juggling essential expenses like rent and energy can soon lead to poor financial and physical health. If you’re struggling with rent and energy bills, you don't have to struggle on your own. Consider contacting Citizens Advice, as their advisors may be able to help.
How Can I Save Money on Energy Bills?
Are rising rents and energy costs making you look for ways to be more efficient and reduce your monthly expenditure? At UKPower, we can help you compare gas and electricity suppliers to find the cheapest energy prices, switch to a better deal and cut the cost of your energy bills.
Click here to run an energy price comparison, and see if you could be paying less for your gas and electricity.