Less affluent areas drive majority of this growth
The number of households renting privately has grown by 1.12 million over the last decade, and that growth was led by the 10% of most deprived areas of England and Wales.
Analysis of census data by residential estate agent Hamptons revealed that there was an increase of 151,800 privately rented households living in the 10% of most deprived areas of England and Wales between 2011 and 2021. This means that 23% of households in the poorest 10% of the countries rented their home privately, up from 18% a decade ago.
By contrast, the 10% of most affluent areas of England and Wales saw the private rented sector add fewer new households than anywhere else in the country. The number of households renting in these areas rose by 80,100, or by just over half the increase seen by the least affluent areas.
Just 13% of households rented their home privately in the 10% of most affluent areas, up from 10% 10 years ago. This marked the smallest increase in the share of households renting a home of any deprivation band.
Around 60% of privately rented homes were found in the 50% least affluent areas. Hamptons also noted that while homeownership rates fell across the country over the last decade, they held up more strongly in the most affluent areas.
Further analysis, combining census data with Hamptons’ lettings data, showed that rising rents, together with an increase in households renting, meant that the total amount of rent paid by tenants in the 10% of most deprived areas had more than doubled over the last decade, increasing 102%, from £2.7 billion in 2012 to £5.4 billion in 2022.
Across the whole of England and Wales, tenants spent a total of £71.5 billion on rent in 2022, a record figure. An increase in the number of privately rented households combined with record-breaking rental growth has pushed the rent bill up from £63.9 billion in 2021 and £42.8 billion back in 2012. Between 2012 and 2022, 54% of growth in the total rent bill came from rising rents, with the remaining 46% coming from an increase in the number of privately rented households.
What is the average rent in the UK?
The average rent on a newly let home in Great Britain was £1,216 per calendar month in December 2022, up 7.7% on the previous year.
“Growth in the private rented sector over the last decade has come on the back of fewer younger people buying their own home, particularly in the less affluent areas,” Aneisha Beveridge, head of research at Hamptons, commented. “While tighter mortgage lending criteria introduced following the financial crash has reduced the number of borrowers struggling to make their mortgage payments, it has also put homeownership beyond reach for some people on below average incomes with small deposits.
“There has been an array of homeownership schemes over the last decade. And while they’ve helped hundreds of thousands of people on to the housing ladder, typically the biggest beneficiaries have been more affluent tenants. Higher interest rates are likely to exacerbate the divide between more and less affluent tenants further, putting mortgage payments for lower earners with limited savings out of reach.”
Beveridge also noted that while 2022 had been a record-breaking year for rental growth, rents had failed to keep pace with wider inflation, and landlords’ rising costs.
“With the cost-of-living crisis hitting tenants particularly hard, rental growth seems to have settled at a new pace, hovering around the 7% mark for the fifth consecutive month,” she added. “While we may see the rate of growth soften a little more in the coming months, rents are still likely to rise around 5% in 2023 given the lack of homes available to rent and inflationary pressures on landlords.”
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