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Marcus Ashworth

Rising UK Rents Will Cushion Any Drop in House Prices

The cost to society of a dysfunctional housing market, as young aspiring buyers are thwarted while landlords saving for retirement are penalized, is rising.

The UK property market is becoming more dysfunctional.

The UK property market is becoming more dysfunctional.

Photographer: Simon Dawson/Bloomberg

UK cities are seeing the highest rent increases in a decade as the return-to-office trend picks up pace. The average UK rent rose by 11.5% last year, with inner London leading the charge with an increase of more than 17%, according to property portal Zoopla. Higher inflation and strong wage growth are causing havoc for “generation rent.” 

The silver lining is that it may lead to a softer landing than many have feared for residential property values. Unfortunately, it will also widen the generational divide between those owning property and those forced to rent.

The UK property market suffered a nasty shock last year from sharply rising interest rates, exacerbated by the fallout from Liz Truss's brief tenure as prime minister. This year, private-sector wage growth of nearly 7% is emboldening landlords to defray their higher mortgage and maintenance costs by squeezing tenants.