Residential estate agent Hamptons has revealed a staggering projection for renters across Great Britain, estimating a record-breaking rent payment of £85.6 billion for the year. This figure marks a substantial leap from the previous year’s £77.6 billion, showcasing an £8 billion surge, the largest annual increase recorded to date. The notable upsurge is attributed to a 25% surge in rented households and escalating rental rates since 2010.
November statistics from the Hamptons Monthly Lettings Index disclosed that the average rent for newly leased properties in Great Britain hit £1,348 per month, reflecting a 10.2% increase from the same period the previous year, or an additional £125. This surge marks the seventh instance of double-digit growth in the past year, marking the highest annual growth rate for any November since Hamptons began its records in 2014.
Aneisha Beveridge, Head of Research at Hamptons, commented on this substantial rental hike, noting, “Tenants across Great Britain paid a record £85.6 billion in rent in 2023, equivalent to the total value of all homes sold in London last year. While over the last 12 months, the rent bill has increased because of record-breaking rental growth, longer-term it’s mostly risen as a result of more households renting.”
A spotlight on generational contributions to this rental surge unveils the dominance of millennials in the market. Born between 1980 and 1994, they accounted for a record £36.9 billion in rent payments this year. This contrasts starkly with the decline observed in millennial renters transitioning to homeownership from 2016 to 2020. Despite a decrease in their share of rented households to a low of 42% in 2021, it has now risen to 44% in 2023, fuelled by sustained post-COVID rental growth and elevated mortgage rates, extending their rental tenure.
Conversely, Generation Z (1995-2012) is rapidly embracing renting, contributing £30.5 billion in 2023, a substantial increase from £6.3 billion compared to the previous year. Representing 36% of all renters this year, their ascent in the rental market has been notable, surging from a mere 1% a decade ago.
London remains at the forefront of rental escalation, witnessing a robust 11.8% surge in average rent, reaching £2,425 per month, eclipsing the figures from November 2022 by £255. Consequently, London tenants contributed a staggering £32.1 billion in rent this year, surpassing figures from previous years and establishing a decade-high record.
Despite signs of moderation in rental growth across Great Britain, particularly evident in Scotland and the South East, Hamptons noted that the slowdown hasn’t been as pronounced as anticipated, attributing it to rising costs for landlords and a dearth of available rental properties.
Beveridge concluded, “Higher interest rates in the medium term are likely to mean more millennials rent for longer. This is why the millennial rent bill has risen over the last few years, at a time when it might have been expected to fall. With the rate at which millennials climb onto the housing ladder slowing, they’re starting their own families and renting larger, more expensive homes which is pushing up the amount of rent they pay.”
The forecast points to a potential shift in the housing landscape, indicating a prolonged renting period for millennials and a delayed increase in rental expenditure for Gen Z individuals, setting the stage for a challenging entry into homeownership in the future.