Intensification of the Housing Crisis: Short Distance to the Homeless Tenants

The housing crisis is exacerbating rent prices. Post-Covid-19, Britain’s housing market has witnessed a staggering surge in rental rates, exacerbating an already acute housing crisis. Reports show a stark 26% rise in rents since the pandemic’s onset, with tenants facing heightened instability, just a paycheck away from potential homelessness. Evictions have skyrocketed, marking a sevenfold increase, while the supply-demand imbalance favours landlords. The government’s delayed reforms, rising borrowing costs, and lack of support exacerbate the crisis, prompting criticism from opposition parties. As the housing crisis intensifies, the looming threat of further rent hikes pushes tenants to precarious financial limits, raising concerns about its political repercussions in the upcoming elections.

The sharp increase in rental rates after Covid-19

According to an analysis, average house rents in Britain have risen by more than a quarter since the start of the Covid-19 pandemic and are still rising. According to the estate and lettings agent Savills, average residential rents will be 9.5% higher this year than in December 2022 and rise by 6% in 2024 before reaching an affordability ceiling.

6% rent increase in 2023

Savills research shows that rents rose by nearly 6% in the first eight months of the year, a 26% increase since the first lockdown began in March 2020. There has been an increase in the supply of rental properties and loan costs.

Average house price in the UK

Britain’s housing market, which boomed during the Covid-19 pandemic, has been hit by higher borrowing costs as the Bank of England battles the highest inflation rate among major advanced economies. The average house price rose 0.2% in August to £310,000, up £9,000 from the low point in March, after a 0.3% month-on-month fall in July 2023. The average property value in Scotland also rose by 1.1% from 12 months to August this year, with the average house price reaching £194,000, £13,000 more than the lowest point in February.

Tenants are one month away from becoming homeless

Many renters no longer hope to own a house and cannot rent one. The findings of the Shelter charity indicate that more than half of the renters are only one paycheque away from potentially losing their homes. According to Shelter data, 51% of renters cannot fully pay their rent amid the cost of living crisis.

Average rent increase for tenants

Data from the Office for National Statistics (ONS) shows that rents rose by an average of 5.3% in the 12 months leading up to last July. However, according to the report of the Shelter, 39% of the British are in a situation where they need more financial reserves to pay their rent if they become unemployed.

Rent a room for over a thousand pounds!

The Evening Standard reported a jump in property rents in London and announced that the average monthly cost of a room now topping £1,000 per month in 44 out of 117 postcodes. According to this report, the number of areas where the price of renting a room exceeds one thousand pounds per month has quadrupled in the past year. This level of rent attracts more than half the income of a typical Londoner who earns an average of £30,000 a year.

Decrease in supply compared to demand for rental housing

The lack of affordable two-bedroom properties is a heavy burden on the housing market. This situation forces renters to move to more affordable areas, and the exodus of people from urban centres to the suburbs significantly impacts prices. Of course, the supply and demand chain remains heavily in favour of landlords, and despite limited rental properties and high demand from tenants, the market remains a landlord market. The growing disparity in the number of UK homes available to rent compared to the growing tenant demand is alarming, and the situation worsens daily.

Landlords are forced to increase the rent

The owners of the houses are forced to increase the rent. Many landlords with buy-to-let mortgages have experienced a sharp cost rise after 14 consecutive interest rate hikes, prompting some to hike rents. Many landlords without mortgages have also increased their rents. The high cost of borrowing forces many potential home buyers to prefer renting longer and not buying a home for now.

Sevenfold increase in evictions of tenants

The ONS data shows that for the first time since 2012, house prices in the UK have decreased compared to last year, but rents have seen an increase. Tenant evictions have reached their highest level in more than seven years. No-fault evictions, officially known as section 21 notices, rose by 38% this year. While no-custody evictions were banned during the pandemic, the Renters Reform Bill, which aims to make the ban permanent, has been consistently delayed.

The government’s delay in amending the tenancy laws

The government has enacted reforms to the tenancy laws and the rights of landlords and tenants, according to which it will make the process of eviction of tenants difficult. During the 2019 elections, the ruling conservative party promised to amend this law but did not make any arrangements for its implementation. Critics say that this plan has a variety of mechanisms to prevent rent increases by property owners and evictions of tenants, and its implementation is also delayed.

Intensification of the instability of the housing market with the lack of planning by the government

Shelter’s chief executive, Polly Neate, considers the lack of government support to cause the instability in the housing market and the emergence of life problems for vulnerable groups. She urged the government to “bring this decision forward and unfreeze housing benefits immediately.” The housing crisis is exacerbating rent prices, and as can be seen from the evidence, Rishi Sunak does not have a defensible plan to solve it.

The position of the Labour Party regarding the housing market crisis

The housing crisis is exacerbating rent prices, and this issue has caused the Labour opposition party to criticize the conservatives. Shadow Cabinet Minister for International Development Lisa Nandy also attributed the current situation to the mismanagement of the conservative ruling party. She said: “Mortgage offers have been withdrawn. Dreams have gone up in smoke. We have seen the largest interest rate hike since 1989, and the cost of borrowing has been at its highest in almost 15 years. A typical family now pays £500 more monthly towards mortgage repayments.” She considered the Labour government’s plan a better alternative to the ruling party’s policies.

A dark outlook for rental rates

A housing crisis exacerbates rent prices and can lead to the homelessness of tenants. UK officials are hopeful that price reforms will occur this year and demand will moderate in 2024, bolstered by an improving economic situation. The Bank of England has used a key rate hike to quell inflation, and mortgage holders are seeing their costs rise. There have also been reports of a lack of supply in the rental sector, increasing house rents. In this way, tenants couldn’t own a house not long ago, and now the prospect of rental rates for them has reached the limit of danger. Rishi Sunak has not successfully controlled rent prices, which could negatively affect the Conservative vote in the upcoming elections.