According to the Hamptons report, the number of UK tenants has increased by a quarter since 2010, reaching 5.5 million households. This growth has more than doubled the current total rent expenditure from 2010.
In November 2023, the average rent for a new rental property in the UK rose to £1,348 per month, a year-on-year increase of 10.2% or £125. This is the seventh time in the past 12 months that double-digit growth has occurred and the highest annual growth rate for November since 2014. Compared to ten years ago, the average rent in the UK has increased by 55%.
The report notes that the "millennial generation" (those born between 1980 and 1994) continues to dominate the rental market. Approximately half of the UK rental market is occupied by the millennial generation, with an average age of around 35. The report warns that if the millennial generation continues to delay homeownership, they may continue to rent until retirement.
In 2023, the rental expenditure of the millennial generation is expected to reach a record £36.9 billion, reversing the declining trend from 2016 to 2020. In 2016, the millennial generation accounted for 58% of all rental households, but it decreased to 42% in 2021 and rose again to 44% in 2023.
Meanwhile, as the Generation Z, born between 1995 and 2012, begins to live independently, more young people are starting to rent. In 2023, the rental expenditure of Generation Z is projected to be £30.5 billion, an increase of £6.3 billion from 2022, representing the highest annual growth rate among all age groups. Currently, Generation Z accounts for 36% of all tenants, far higher than the 1% a decade ago.
Although the rental expenditure of tenants in other age groups has slightly decreased in 2023, the decrease is not significant. This is mainly due to some individuals becoming homeowners, reducing the number of tenants.
Over the past year, rent growth in London has been particularly significant. The average rent has risen to £2,425 per month in November 2023, an 11.8% increase or £255 from November 2022. As a result, the total rent paid by London tenants this year will reach a record £32.1 billion, surpassing £28.7 billion in 2022 and £17.5 billion a decade ago. This means that the total rent in London exceeds the combined rent of England's North, Central, Wales, and Scotland (£29.4 billion).
The report highlights that the main driver of rent growth in London still comes from inner London. In November 2023, the rent for new leases in inner London increased by 13.2%.
The above data indicates a continuous increase in the total rent and average rent in the UK, with the millennial generation and Generation Z being the main forces in the rental market. The report also points out that the rise in mortgage interest rates has contributed to the growth of rents. However, these data also highlight the severity of the housing issue in the UK, requiring government and relevant agencies to take measures to address this problem.
