Record rents of more than £1,000 a month and the average house price breaking through the £260,000 barrier are putting added pressure on households already facing a cost of living crisis.
Data from the tenant referencing agency HomeLet showed the average UK rent rose to £1,069 a month in February, up 8.6% on the same month of last year when the figure stood at £984.
The date, which is based on recently agreed tenancies, shows huge variation around the UK but in the south-east and the east of England, monthly rents are above £1,000 and in Greater London the average was up by 11.8% year on year, at £1,757. In the south-west, tenants paid an average of £999 a month.
Separate figures from the mortgage lender Nationwide showed house prices also hit a high during the month, with the average breaking through the £260,000 mark for the first time.
The building society said house prices have gone up by almost £30,000 over the past year – the biggest cash increase in the 30 years it has been reporting on the market.
The cost of buying a home is now equivalent to 6.7 times average earnings – up from 5.8 in 2019.
Although mortgage rates have been edging up, they are still close to historic lows. However, rising inflation could mean further Bank of England base rate rises are on the cards in coming months, meaning higher costs for those on variable rate mortgages.
Some borrowers have already seen their monthly costs go up in line with December’s base rate rise, and face further increases as a result of the January rise.
Osama Bhutta, the campaigns director at the charity Shelter, sid housing costs are most people’s biggest monthly expense, with private rents in particular taking a huge chunk out of take-home pay.
The government’s most recent English Housing Survey found that in 2020-21, private renters were spending an average of 31% of their household income on rent.
“When other bills and essential costs shoot up, it piles more pressure on to households whose finances are already stretched too thin,” Bhutta said.
“Our emergency helpline is taking call after call from people who just don’t know how they’re going to keep paying sky-high rents and make ends meet. People on lower incomes are being squeezed so hard they’ve got nothing left, and when people can’t afford their rent they face eviction and the very real threat of homelessness.”
Sarah Coles, the senior personal finance analyst at Hargreaves Lansdown, said rising house prices would add to the cost of living crisis.
“Some households are already borrowing more to make ends meet, and those with a bit more wriggle room in their budget are squirrelling money away to last them through more difficult times,” she said.
“As new and dramatically higher energy bills hit the mat, there will come a point when stretching your finances to get on to the property ladder feels like a step too far.”BUSINESS NEWS • ECONOMIC NEWS • In Business • MAKE MONEY