New research by UK-based Zero Deposit reveals that surging demand for rental homes has caused the average rent to sky-rocket in recent years, with UK tenants now paying 46 per cent more for their monthly rent 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.
“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,” said Sam Reynolds, CEO of Zero Deposit. “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 Zero Deposit research incorporates data from several areas of the rental market, including the number of renters across the UK, the average cost of renting an apartment, the increase in the number of tenancy deposits held for UK tenants, and the total value of these deposits. Findings from the research show that:
• The current rental market is buckling under the pressure of high demand from UK tenants.
• There are currently over 5m deposits held across the UK, a 66 per cent increase on the 3m held a decade ago. This number has climbed by 5 per cent in the last year alone, having also increased by 5.5 per cent between 2022 and 2021, the highest rates of annual growth since 2017.
• On the supply side, there were an estimated 5.22m private rental homes in 2023 across the UK, down 3.1% compared to the peak of 5.38m private rental homes in 2017.
• The average monthly rent climbed to £1,232 in 2023, marking a 9.7 per cent increase over 2022 and a 5.8 increase over 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 per cent.
In its summary, Zero Deposit also points out that the Tenant Fees Act 2019, which came into effect in June of that year, limited the rental deposit charged to tenants at five weeks rent, or six weeks if the annual rent exceeded £50,000. As a result, the rental deposit paid by UK tenants had been declining, falling by an average of 2.6 per cent per year between 2019 and 2022. The latest figures show that in 2023, this cost climbed by 3.1 per cent, up from £996 in 2022 to £1,026 in 2023. Zero Deposit estimates that the total value of tenancy deposits held by government approved protection schemes totalled £5.15bn in 2023, up 73 per cent from the £2.98bn held in 2014.
Learn more here: No deposit renting – Freedom from deposits – Zero Deposit
