Generation Rent claims to have analyzed and predicted the prospective rental rates for the coming two years.
According to these activists, the trajectory indicates a 14% surge in rents compared to the newly established benefit levels by the end of 2025.
In a detailed statement released by the group, they express their apprehensions about the situation. They state, “The considerable inflation in rent costs in England is on track to outpace the incremental adjustments in social security designed for renters, as articulated in the Autumn Statement. This unsettling trend is poised to leave the affordability landscape for low-income households nearly as formidable as it stands today, and all this is anticipated to unfold within a relatively short span of 18 months.”
The concern raised by Generation Rent underscores the potential challenges and hardships that low-income households might face in the near future, with the gap between rent increases and corresponding financial support widening. This forecast paints a sobering picture of the evolving dynamics in the rental market, warranting attention and consideration for those navigating these housing challenges.
The organization has put forth a forecast indicating an anticipated 8.5% escalation in rent inflation from the present moment until the latter part of 2025. This trajectory would result in a significant 14.2% surge in rents, surpassing the benchmark used to determine the level of support allocated to private renters receiving Universal Credit or Housing Benefit, commencing in April 2024.
In response to this projection, the group contends that it is imperative for the government to establish a permanent reconnection between Local Housing Allowance (LHA) and actual rents. This plea follows Chancellor Jeremy Hunt’s recent announcement wherein he unveiled plans to uplift LHA to the 30th percentile of local rents, marking the end of a four-year freeze.
The Chancellor’s proposed adjustment to LHA, calculated based on average rents up to September 2023, is slated to come into effect in April 2024. These newly revised support levels are estimated to be a substantial 13.3% higher than the assistance currently extended to renters. This move is anticipated to provide much-needed relief, particularly given the ongoing challenges in the housing sector. The call for a permanent reconnection between LHA and actual rents underscores the group’s commitment to advocating for sustainable and responsive housing policies.
Generation Rent asserts that it has devised a predictive model for estimating rent inflation, drawing from the newly released rent index by the Office for National Statistics. This model incorporates data on wages, population, and housing stock.
According to their projections, by the final quarter of 2025, rents in England are expected to rise by approximately 8.5%, surpassing current levels by 14.2%. This increase is noteworthy as it exceeds the reference rents that will play a role in determining the new Local Housing Allowance (LHA) rates set for April.
Furthermore, the group contends that this escalation in rents could have repercussions for housing affordability, especially for those dependent on benefits. They argue that this development might bring housing affordability levels back to their current unsustainable state, merely 18 months after the anticipated LHA increase takes effect.
Dan Wilson Craw, deputy chief executive of Generation Rent, says: “Last month’s announcement of an increase in LHA is sorely needed but will be overtaken quickly by actual rents, and tenants facing painful decisions today will be in the same position in two years’ time. It is past time for the government to re-link LHA with local rents permanently so support automatically adjusts to housing costs every year.”
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