Rise in rental demand post-pandemic due to increased number of adults moving out from their parents' homes
In the wake of the pandemic, the private rented sector in the UK has been undergoing significant changes. The housing market, long plagued by a lack of supply, has been further strained by the spike in demand since the end of restrictions.
Generation Rent, a housing advocacy group, has called on the government to take action. They propose increasing Local Housing Allowance benefit rates, building more social housing, and placing limits on mid-tenancy rent rises. These measures are intended to address the rising costs and uncertainty that have kept many existing tenants from moving.
Rising rents and restrictions have been the primary reasons for fewer tenants moving since the pandemic. This stagnation in the market has led to a lack of churn, resulting in fewer vacant properties coming to market and more competition for those that do.
The deposit protection system, designed to safeguard tenants' deposits, has seen a shift in its size. In the 2020-21 financial year, the system increased by 101,000 deposits, marking a 50% fall in the pre-pandemic average annual growth. However, the system has continued to grow, with 217,000 more deposits protected in 2021-22 and another 226,000 in 2022-23.
Despite the growth in the deposit protection system, the proportion of tenancy deposits returned to tenants has decreased. As of March 2022, only 31% of deposits were returned, down from 40% in 2019 and slightly up from 28% in 2021-22.
The trend of falling rents reversed in 2021-22, with market rent inflation hitting 12.3% in the UK and 17.8% in London in the 12 months to July 2022. This rise in rents has been a significant factor in the record rent inflation figures in the past two years.
The fall in the number of young adults living with parents was followed by a significant increase in demand for private rented accommodation. In Q2 2021, 42.3% of 15-34 year olds in the UK were living with their parents. However, from summer 2021, this trend began to reverse, with the number of young adults living with parents decreasing by 307,000 in the 12 months to summer 2022.
The rise in rents is discouraging tenants from moving, contributing to the fall in the number of homes being listed for rent. This, coupled with the increase in demand for private rented accommodation, has led to a competitive market where renters face fierce competition for new tenancies and are vulnerable to unaffordable rent increases.
The failure of the welfare system to respond to rising rents has left renters on low incomes even more exposed to the cost of living crisis. Dan Wilson Craw, Acting Director of Generation Rent, emphasised this point, stating that private renters are particularly vulnerable in this market.
Photographer Chris Robert captured an unspecified scene related to the private rented sector for this article. His work serves as a visual reminder of the ongoing challenges and changes in the sector.
As the UK continues to navigate the post-pandemic recovery, addressing the issues in the private rented sector remains a pressing concern.
