Renters More Vulnerable to Rising Interest Rates

Renters are more vulnerable to the recent rise in interest rates, according to new data collected by Sky News’ Data and Forensics team.

Over the last 18 months, interest rates have risen from 0.1% to 5%, which has undoubtedly affected mortgage-holders who are now paying higher monthly payments.

But the impact has also been felt by renters who are subject to rent increases.

Landlords raising rent to meet mortgage costs

In the UK, around 60% of rented properties are mortgaged, according to Zoopla. Most of these mortgages are taken out on an interest-only basis, so they are even more exposed to rate changes. This has meant many landlords have increased their rent to try and meet the rising costs.

It’s not uncommon for landlords to impose annual rent increases in line with inflation and market demand. But over the last few months, rent payments have been rising at a pace that many renters cannot keep up with.

In the year to June 2023, the average monthly rent has risen from £1,283 to £1,413, representing an increase of 10.2%. Rents for newly advertised properties have also increased at a quicker rate, which could explain why some landlords are removing long-standing tenants.

Andi Michalakis, from Stevenage, told Sky News that she was served a Section 21 ‘no fault’ eviction notice after her landlord had repeatedly put up her rent in 2022. Prior to this, Andi had paid her rent on time every month, but she could not afford the latest price hike.

Like many renters who have been evicted, Andi is now facing a search for temporary accommodation with her 14-year-old son.

Competition increasing risk of homelessness

From 2019 to 2023, there has been a 42% increase in demand for rental properties in the UK, according to data from Rightmove. This has made it increasingly difficult for people on lower incomes to find affordable properties, as many landlords are now favouring tenants who can pay more in rent.

Jasmine Basran, Head of Policy and Campaigns at homeless charity Crisis, has said that increased competition is making things particularly difficult for those who are worse off. She said: “With what’s happening with mortgages, everyone’s turning to the private sector and therefore, landlords have choice.”

As evicted renters struggle to find new rental properties, homelessness prevention charities have seen a spike in demand for their services. Since January 2022, more than 30,000 people have contacted homelessness organisations after being served a Section 21 eviction notice.

Those who are the most vulnerable will be prioritised for social housing. But as the waiting list is currently at 1.2 million, the majority of people are placed into temporary accommodation. As a result, the number of households in temporary accommodation is now at its highest since records began.

How the government plans to help renters

Crisis has said that there are things the government can do to ease the current situation for renters. They’ve commented that as well as the human cost involved, the issues facing renters have also come at a “phenomenal financial cost to local authorities”.

In the latest financial year, councils spent at least £1.6 billion on temporary accommodation, according the government’s own statistics. Homelessness charities like Crisis believe that with a clear plan for delivery, this money could be spent on supporting people into long-term housing instead.

The Department for Levelling Up, Housing and Communities has said in response: “Our landmark Renters (Reform) Bill will deliver a fairer deal for both renters and landlords. We are abolishing Section 21 ‘no fault’ evictions to give greater security in their homes.”

If you’ve been unfairly evicted from your rented property, or you’re in a dispute with your landlord, our solicitors could help you. Just give us a call on the number at the top of the screen or enquire online.


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