London's rental crisis will worsen as monthly payments in the UK are expected to further increase in coming years, outstripping any growth in earnings, a prominent think tank warns.
The Resolution Foundation anticipates millions of households will experience further strain as rents are likely to increase by 13 per cent in the next three years.
This is despite rent rises surging at the quickest rate recorded - 18 per cent in the last two years.
In March, the UK government weakened significant aspects of the renter's reform bill, which sought to expand the protections for renters against no-fault evictions.
Rishi Sunak and the Housing Secretary Michael Gove were accused of succumbing to Tory MPs lobbying to support the interests of landlords.
Christian Hilber, Professor of Environmental Geography at the London School of Economics, says renters' rights in the UK need greater protection.
"Landlords can increase rents after a lease expires by however much they want."
He suggests implementing a mild form of rent control that strikes a balance, protecting renters' rights and incentivizing landlords to provide rental housing.
The Resolution Foundation said in their report "Through the Roof" that the market's sharp growth occurred due to a post-pandemic correction following a lift on the ban on evictions and repossessions.
The report said private renting had almost doubled from 11% of all households in the mid-1990s to 20%. It recorded an increase in the average age of renters taking on the lease, between 30 and 49 years old, no longer only for those in their 20s.
The report found rent rises were cooling from an annual market rent growth rate of 10.4% in June 2023 to 7.5% by March 2024.
Consecutive years of increasing wages have also moved the market upwards, with wages rising by an average of 13 per cent since January 2022. Rents are now near their pre-pandemic high relative to income.
Despite rents adjusting to these factors and wage inflation stalling, we will only see the impacts of this reset on the private rental sector in a few years.
Professor Hilber says Londoners are spending significantly more than the renting "rule of thumb (dictating) people should spend about a third of their income for housing costs."
In 2021, the average household in Britain spent 42% of their post-tax income on rent (£13,560). (The highest amount since Hamptons began their records in 2010.)
There has been a rising trend of young professionals opting to live outside London amid the Capital's rental crisis.
According to a real estate company Hampton's study, approximately 48% of 20-year-old renters who moved apartments in 2023 chose to live outside the Capital.
Professor Hilber says these further rent hikes will negatively impact on living standards: "This will adversely affect many families and younger people who can't afford to own and don't qualify for social renting."
Professor Hilber says a lack of supply is a critical driver in price and rent increases.
"We don't build enough housing, and we have an undersupply of all three types of housing: social rental, private rental, and owner-occupied. Therefore, in the local run, prices and rents are increasing."
