Rocketing interest rates are putting a lot of people with mortgages under financial strain, but rents are also rising.
Rising interest rates are hitting private renters as well as mortgage owners, with some landlords seeking to recover costs by increasing rents or selling completely.
Charities have warned that hundreds of thousands of renters could be left unable to pay their rent or forced out of their homes.
Figures from the Office for National Statistics show that private rental prices in the UK rose by 5 per cent in the 12 months to May 2023, the largest increase since it began being collected in 2016. The Institute for Fiscal Studies says it’s likely that high interest rates are at least partly to blame for rent hikes.
“Only about 40 per cent of properties in the UK which are let out by landlords have mortgages attached to them,” says Conor O’Shea, from campaign group Generation Rent.
The bigger picture is a surge in demand for rental properties – in part caused by a post-pandemic exodus of adults leaving home – and a lack of available properties for renters. This is causing some landlords to increase their asking price.
It’s a particularly difficult situation for low income renters, because although rents have increased, housing benefits have been frozen since 2020.
“It’s an absolutely brutal time to be a renter in the UK,” says O’Shea. “People are being forced out of their homes by rent increases. They can’t live there anymore because the rent has gone up so much, and then they’ve been thrown into the market where the costs are just so high that there’s a real struggle to find affordable homes.”
If more buy-to-let landlords sell-up because of interest rates, even more tenants will be fighting for accommodation. Section 21 no-fault evictions, where landlords in England and Wales don’t have to provide a reason for evicting tenants, have quadrupled since 2019.
The government’s long-awaited renters reform bill, which was introduced to the Commons last month, seeks to tackle that issue by adding further restrictions, but O’Shea says it’s not going to solve all the problems. “It doesn’t deal with affordability. There’s nothing to suggest that we can bring rents down or control the rise of rent.”
In light of rising interest rates the government has agreed to a series of measures with lenders that are designed to help mortgage-owners facing financial strain. So far, there have been no similar measures for renters.
This episode was written by Claudia Williams and mixed by Imy Harper.