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Think Tank’s Projections: Rent Surge of 13% Expected by 2025!


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The rental market is undergoing significant shifts, with implications for both tenants and landlords. Recent research from the Resolution Foundation provides valuable insights into the factors driving rent increases and the potential challenges ahead.


Market Trends: Exploring the Data


Surge in Rental Prices:

Recent data reveals a notable uptick in rental prices, with new tenancies experiencing an 18% increase since January 2022. This surge comes after a period of pandemic-induced uncertainty, signaling a rebound in the rental market.

Impact on Low-Income Families:

The proportion of poorer families renting has nearly tripled since the mid-1990s, reaching almost 30% in 2021-22. This demographic shift underscores the growing significance of rental affordability issues.


Understanding the Drivers of Rent Increases


Beyond Interest Rates:

Contrary to popular belief, rising interest rates impacting buy-to-let mortgages are not the sole drivers of rent hikes. While this factor may contribute, the primary drivers include the economic rebound post-pandemic and substantial wage growth.

Pandemic’s Influence:

The pandemic-induced economic downturn led to a temporary decline in rental prices, reaching their lowest levels relative to earnings. However, as economic activity resumed, rents began to climb, fueled by pent-up demand and changing housing preferences.


Future Projections: Navigating Rent Surges


Forecasted Growth:

Projections suggest that average rents could surge by 13% over the next three years. This anticipated growth, outpacing forecasted earnings increases, poses challenges for renters, particularly those with limited financial resources.

Long-term Implications:

The projected increase in rental prices underscores the need for proactive policy interventions and long-term strategies to address housing affordability. Bold measures are required to ensure that renting remains a viable option for all income groups.


Policy Responses: Addressing Housing Affordability


Need for Bold Solutions:

Senior Economist Cara Pacitti emphasizes the importance of bold policy responses to mitigate the impact of rising rents on low-income families. Solutions include regular uprating of Local Housing Allowance and initiatives to boost housing supply.

Proactive Measures:

Policy makers must prioritize initiatives aimed at increasing affordable housing stock and supporting tenants facing financial strain. Long-term strategies focused on sustainable rent levels and tenant protections are essential for ensuring housing stability.


Landlord Perspectives: Balancing Supply and Demand


Supply-Demand Dynamics:

Ben Beadle, Chief Executive of the National Residential Landlords Association, highlights the role of supply-demand dynamics in driving rent increases. He emphasizes the need for pro-growth measures to support the rental market and address affordability concerns.

Housing affordability:

As rental prices continue to climb, stakeholders must collaborate to address the challenges posed by housing affordability. Effective policy interventions, coupled with proactive measures from landlords and tenants alike, are essential for ensuring a sustainable and equitable rental market.

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