Tenants already struggling after big increases last year now face a rise of up to 8%, says agent Savills – a blow to first-time buyers.
First-time buyers who can’t yet afford to buy will be dealt a further blow with rent rises of as much as 8% expected, according to Savills.
The estate agent is predicting further rises of 8% across the most desirable London locations and 7% in the most sought-after central zones. These rises follow average rent rises of 11.5% across the capital last year.
Those in central London will be hit hardest, but tenants outside the capital will also see rises. Although the LSL Buy to let index shows a fall of 0.3% in January compared with December, rents are still 4% higher nationwide than a year ago, and comparison site Money dot co dot uk estimates that one in two tenants will be charged at least an extra 4%.
“Stock shortages persist, which is good news for landlords,” says Jacqui Daly, director of Savills residential research. The study shows that landlords in prime north London locations such as Hampstead and Islington prosper the most: rents there shot up by 17.6% last year.
But for tenants already feeling the squeeze, it’s a bitter blow. According to the Association of Residential Letting Agents, in the last three months of last year 40% of its members reported an increase in tenants struggling to meet payments. This was the first time the number has risen in 18 months. This suggests that job losses and pay cuts are beginning to take hold, the association says.
The impact of higher rents will also be felt in the residential sales market: high and increasing rents give aspiring buyers little chance to save for a deposit.
However, despite the rising rents, there are ways for tenants to save money:
Negotiate with your landlord
You don’t necessarily have to accept a rent rise. “If you have signed a fixed-term tenancy agreement then your landlord cannot increase the rent during that time without your consent,” says Hannah Maundrell of Money co uk.
The only exception to this is if rental reviews are in your original tenancy agreement. If this is the case, you could try to negotiate with your landlord. “If he or she won’t budge, try asking for some extra benefits such as the inclusion of some household bills,” Maundrell says.
There are nearly 700,000 vacant properties in Britain and some are available to let cheaply as “short life housing”. These are run by cooperatives, often in buildings scheduled for refurbishments by housing associations. Once the long-term tenants have moved out the buildings are left empty until work starts. As part of the cooperative a new tenant can often live there for about a year.
News of the properties usually spreads by word of mouth and cities such as London, Brighton and Liverpool in particular have a history of the schemes. For more details, see independent charity Empty Homes dot com.
Property guardianship is another option to rent cheaply. It means you house-sit in a vacant home or commercial building. Rents can be £65 a week in the priciest locations, such as London’s Covent Garden, but as little as £20 elsewhere. It’s not for everyone: you may be required to do some light work on the property and there is no security of tenure – you can be moved on at any time. Agencies such as Camelot Property Management or Ad Hoc Property Management are a good place to start.
Rent a room
Official statistics put the number of lodgers at more than 156,000. In fact the real figure could be as high as 970,000, according to a study by Halifax Home Insurance.
Under the government’s Rent a Room scheme, those renting out a room don’t pay tax on the first £4,250 they earn (£2,125 each for couples), which encourages many keep charges down. Local newspapers and websites can help match you to potential housemates and rooms, such as Gum Tree, Spare Room, and FlatmateRooms.co.uk.