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How are elevated rental costs impacting tenant affordability and choices?

The data indicates that there has been minimal change in recent months; rents remain steep, and available rental properties are scarce. According to the “State of the Lettings Industry 2023” report from Goodlord and Vouch, 76% of tenants have encountered challenges in securing a rental property. Considering this, what emerging patterns can be observed?

  1. Tenants are relocating to more distant locations, even considering moving abroad to escape high rents. SpareRoom recently disclosed that 72% of its platform’s renters are contemplating a move to a different area due to the high rents in their current location. Additionally, 50% mentioned knowing someone who has already made such a move. Seven percent of renters are contemplating international relocations, with Spain, Australia, and Portugal topping the list of favoured destinations. The government should intervene to address this crisis, as it risks driving more renters out of major cities and possibly out of the UK entirely.
  2. Tenants are increasingly turning to their parents for financial support when renting, not just for purchasing a home. The Tenant Fees Act 2019 limits security deposits to five weeks’ rent in most cases. However, as rental costs surge, 54% of tenants in a recent survey reported dipping into their savings to cover this upfront expense. However, it may not be sufficient for everyone, with 15% revealing that they had to seek assistance from their parents to meet this cost. Others resorted to loans, credit cards, or overdrafts. As a result, 26% had to reconsider their plans to move altogether. Sam Reynolds, CEO of Zero Deposit, highlights the significant delays tenants face in waiting for the return of their previous deposits, potentially causing them to miss out on their intended homes or settle for less suitable options.
  3. Support from family members isn’t limited to helping first-time homebuyers; siblings are now contributing more to make homeownership a reality, accounting for 11% of family members contributing to deposits, with an average contribution of £10,250 in 2023. Parents contribute the most, offering an average of £15,250, while grandparents come third, providing an average of £10,000. Estate agents are advised to conduct thorough anti-money laundering checks, including requesting proof of asset sale or inheritance when necessary.
  4. Energy efficiency remains a top priority for tenants. While property buyers may be willing to invest in properties that need renovation, renters lack the luxury of making such upgrades. Consequently, they seek rental properties with higher specifications, especially in terms of energy efficiency. Smart technology is also a preference, allowing tenants to manage their energy consumption efficiently. Even though proposals for landlords to upgrade properties to an EPC C rating have been abandoned, tenant preferences highlight the value of investing in energy efficiency in the future.

The information in this post is valid to the best of our knowledge on the date of posting. It is advised that you seek independent advice based on your individual circumstances. 

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