For the past couple of years, anyone who has tried to move to a new rented home has been shocked by how high rents are – and often face extra hurdles to secure a tenancy, including competing with others at mass viewings, providing photos and personal statements, and even entering bidding wars.
Rents everywhere have been rising faster than wages, and in some parts of the country, including London, faster than inflation. And even if we’re not moving, our landlords are often demanding that we start paying the going market rate.
New figures we have analysed reveal that 300,000 young adults moving out of their parents’ homes added to rental demand since the end of pandemic restrictions in 2021, which has allowed landlords to name their price.
Generation Rent looked at ONS figures for adults living with their parents. In June 2019, there were 6.66m 15-34 year olds living with their parents – 40.1% of the total. As offices and universities closed and many people started working from home, many young adults took the opportunity to move out of rented homes and spend time with their families. As a result, in the two years to June 2021, the number living with parents increased by 314,000 to 6.97m (42.3%).
From summer 2021, as offices and universities reopened, many young adults moved back to cities, and back to the rental market. In the 12 months to June 2022, the number of young adults living with parents fell by 307,000.
It also appears that young men are more likely to have moved out of their parents’ home since the pandemic than young women.
Tenancy deposit data we obtained via Freedom of Information indicates that these young adults predominantly moved into private rented homes. The size of the deposit protection system increased by 101,000 deposits in the 2020-21 financial year, a 50% fall on the pre-pandemic average annual growth of 150,000. But in 2021-22, the number of deposits protected increased by 217,000, and increased again in 2022-23 by 226,000. (Many of these deposits will be protected on behalf of more than one individual.)
This adds to an existing body of evidence that indicates the private rented sector grew during this period and contradicts concerns that rents have risen because the sector has shrunk. The English Housing Survey recorded an increase of 178,000 private renter households in England between 2020-21 and 2021-22.
The fall in demand in 2020-21 for rented accommodation caused rents to fall, particularly in London, with rents on new tenancies recorded by Zoopla falling 1.2% in the UK and 9.4% in London in the year to March 2021.
This trend reversed in 2021-22 with market rent inflation hitting 12.3% in the UK in the 12 months to July 2022, and 17.8% in London.
The tenancy deposit data also suggest that fewer existing tenants have been moving since the pandemic, initially because of restrictions and uncertainty, but more recently because rents are rising so rapidly. The number of tenancy deposits returned to tenants as a proportion of the total a year earlier* was 31% in the year to March 2023, down from 40% in 2019, though slightly up on 2021-22’s figure of 28%. This lack of churn leads to fewer vacant properties coming to market and more competition for those that do.
It is also possible that the fact that extra demand has come more from men than women might mean that, where tenants are in work, they have higher incomes and are therefore able to pay higher rents, leading to the scale of rent increases we’ve seen.
In many ways the pandemic is long behind us, but its reverberations are still making life miserable for private renters, who are not just facing fierce competition for new tenancies, but are also vulnerable to unaffordable rent increases imposed by landlords who want to cash in on rising market rents.
The failure to build enough homes in recent decades has left the country unprepared for the huge spike in demand since the end of restrictions. 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.
Generation Rent is calling on the government to:
- increase Local Housing Allowance so that renters getting benefits can cover market rents,
- increase building of new social housing to meet demand for homes, and
- place limits on in-tenancy rent rises so that tenants do not face rent increases they cannot afford.
*Data for deposits released from protection was available only for custodial schemes, representing about half of the sector.