Yorkshire Times
Weekend Edition
1:00 AM 28th March 2024

Average Monthly Cost Of Renting Up 46% In The Last Decade

Ethan Wilkinson on Unsplash
Ethan Wilkinson on Unsplash
The latest research by Zero Deposit, the alternative to a tenancy deposit, has revealed how surging demand for rental homes has caused the average rent to spiral in recent years, with UK tenants now paying 46% more per month than they were a decade ago. What’s more, the average cost of a rental deposit has increased for the first time since the introduction of the The Tenant Fees Act 2019 in June 2019.

The company analysed rental market data, looking at the number of renters across the UK, average cost of renting, the increase in the number of tenancy deposits held for UK tenants and the total value of these deposits.

The research shows that the current rental market is buckling under the pressure of high demand from tenants.

The figures show that there are currently over 5m deposits held across the UK, a 66% increase on the 3m held a decade ago. This number has climbed by 5% in the last year alone, having also increased by 5.5% between 2022 and 2021, the highest rates of annual growth seen since 2017.

What’s more, the latest figures on the supply of private rental sector stock shows that in 2023, there were an estimated 5.22m rental homes across the UK, an annual reduction of -0.3% and down -3.1% versus the peak of 5.38m private rental homes seen in 2017.

The result of this growing demand versus a lack of available homes? Rental prices have spiralled in recent years.

The latest figures show that the average monthly rent climbed to £1,232 in 2023. This marked a 9.7% increase on the previous year, with the average rent also increasing by 9.7% between 2021 and 2022 and by 5.8% between 2020 to 2021.

To put this into perspective, in the seven years between 2014 and 2020, the average UK rent increased by an annual average rate of just 2.3%. In the last three years, this annual rate of growth has averaged at 8.4% per year and in the last decade alone, the average monthly cost of renting in the UK has climbed by 46% (2014 to 2023).

The only silver lining for tenants has been The Tenant Fees Act 2019 introduced for tenancies in England, which came into effect in June that year, limiting the rental deposit charged to tenants at five weeks rent, or six weeks if the annual rent exceeds £50,000.

As a result, the rental deposit paid by UK tenants had been declining, falling by an average of -2.6% per year between 2019 and 2022. However, the latest figures show that in 2023, this cost climbed by 3.1%, up from £996 in 2022 to £1,026 in 2023.

As a result, Zero Deposit estimates that the total value of tenancy deposits held by government approved protection schemes totalled a huge £5.15bn in 2023, up 73% from the £2.98bn held in 2014.

Sam Reynolds, CEO of Zero Deposit commented:
“It’s clear that our reliance on the rental market has been growing consistently over the last decade, however, demand for rental homes has exploded in recent years as soaring house prices have forced many to postpone their plans to purchase. Given the fact that house prices are only predicted to increase further this year, it’s unlikely that this cultural shift will change anytime soon.

"We simply don’t have an adequate supply of quality rental accommodation to satisfy this surge in demand and the consequence of this market imbalance has been a huge acceleration in the cost of renting.

"The cost of renting in the UK has climbed by an average of 8.4% per year in the last three years alone versus an annual rate of increase of just 2.3% over the previous seven years, which really demonstrates just how bad the problem has become for today’s renters.

"And while they had been afforded a small reprieve with restrictions on tenancy deposits introduced in 2019, last year was the first year that this cost has climbed since these measures were introduced.

"This increase will only add to the huge financial obstacle many renters are already facing and make it even harder for them to successfully find, secure and maintain a tenancy within the private rental sector.”

Data tables can be viewed here