Whilst rental increases across the UK have shown some signs of slowing in 2024, the rental market remains tumultuous, with average UK rent still on the up. Data from UK flat-sharing site, SpareRoom, shows the average cost of rent rose by 4% in Q3 2024 compared to Q3 2023.
However, it’s not only rental costs that are posing problems to the rental market. Supply and demand is still out of kilter, both within London and more widely across the UK.
Research shows that in the seven years between September 2017 and 2023, the number of rooms for rent decreased from 65,000 to just 35,668 - that’s a decline of almost 50%. This can likely be attributed to several factors, including higher property and council taxes, a reduction in mortgage interest deductions, and stricter licensing, room size, and safety regulations for shared homes.
Meanwhile, the number of renters looking for a room has almost tripled over ten years, from 70,838 in January 2013 to 227,148 in September 2023.
As of Q3 2024, the ratio of people looking for rooms in the capital is at 3.67, and the UK-wide average is even higher at 3.99.
According to SpareRoom, the solution to balancing this supply-and-demand issue is more rooms.
According to ONS, There are approximately 26 million spare rooms in the UK - if even 1% of those rooms were rented out, it would create enough supply to restore the market to 2017 levels. In theory that would mean rents also return to 2017 levels, when the average room in the UK was £456 (Q3 2017), but that’s clearly not going to happen.
However, what is clear, is that there’s a huge potential supply of rooms out there and just a tiny fraction of them being used would make a significant difference enough to halt - and hopefully start to reverse - the drastic rent increases we’ve seen over the past decade.
And with a financial hangover expected in January post-Christmas and New Year, on top of mortgage rates continuing to rise, taking in lodgers not only eases demand on renters but could also provide financial respite to struggling homeowners.
Matt Hutchinson, Director at SpareRoom commented: “With so many empty bedrooms in the UK, we’re missing a trick when it comes to our housing stock. Renting out even a fraction of these currently unoccupied spaces would help both renters and struggling homeowners, easing the extreme imbalance in supply and demand and, ultimately, helping to bring rents down across the country.”
