The cabinet appointed by the UK’s next Prime Minister will face a challenging UK rental landscape this Autumn.

Top of the Private Rental Sector (PRS) in-tray is the impact of historically high inflation on rental prices, which have joined the seemingly endless list of goods and services impacted by the current cost of living.

The DPS’ Q2 2022 Rent Index recently reported the biggest quarterly rise in rental costs (2.47%) in our fifteen-year history; translating into an annual rise of 8.21% since Q2 2021. The last 12 months have also seen the four largest quarterly percentage rent rises on record.

Our figures show the average cost of renting across the UK now stands at £870 per month – the highest ever value we’ve documented.

We calculate tenants can typically pay on average between 35% and 40% of their salary on rent, meaning those who are saving to buy a house or a larger deposit on a new rental property will be feeling a financial strain.

It’s not just tenants feeling the pinch, however. Landlords are experiencing the higher price of borrowing and maintaining their properties as well as the increase in their living costs.

The reason all this matters so much is that the PRS, which accounts for around five million homes or 18% of all properties in the UK, is integral to both the UK’s housing needs and economy.

Many of us have been tenants at some point, perhaps on the way to buying a first home. Renting is also a solution for those who don’t want to buy a house.

As rents continue to climb, the number of available rental properties has also seemingly decreased. Reasons for the shortage are complex but include tenants remaining in accommodation owing to difficulties raising a new deposit or renters struggling to find an alternative let.

The market is also changing structurally, with some landlords selling their properties on to residential buyers, retailers or larger investors, such as banks and retailers.

As a result, the demand for rental property is outstripping supply, and prices don’t appear to be falling any time soon.

Over the odds

Back in April our Q1 2022 Rent Index reported how 15% – or one in seven – private tenants had paid over the asking rent price to secure a property.

We’re now also hearing stories about some tenants signing up for properties after only viewing them online for fear of losing the opportunity – and even tales of “rent gazumping”.

More than ever the question of how society treats tenants and landlords will be a key issue for the next administration, which has to ensure the availability of good quality, affordable rental stock, and also make sure that the PRS operates effectively for all.

As the country’s largest provider of tenancy deposit protection services, The DPS will continue to share its independent, expert knowledge with the industry and government and contribute to discussion on these complex challenges and the health of the UK’s vital rental sector.

Author bio: Matt Trevett is Managing Director at The DPS.

Read more about the PRS crisis.