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Record Immigration Behind a Third of UK Rent Rises

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The UK is grappling with a significant rental crisis, with record levels of immigration being a primary driver behind the surge in rental prices. According to a new analysis by Capital Economics, immigration has accounted for a third of the rent growth in the UK since the Covid pandemic. In the two years leading up to June 2023, immigration led to an additional 430,000 households entering the private rental market, pushing rents up by 11% more than they would have risen otherwise.

This analysis coincides with data from the Office for National Statistics (ONS), which is set to publish figures showing total net immigration for 2023. The past two years have already seen unprecedented records, with net immigration reaching 467,000 in 2021 and an astonishing 745,000 in 2022. Although the number fell slightly to 672,000 in the year to June 2023, it remains nearly four times the 184,000 figure recorded in 2019, before the pandemic.

Between mid-2021 and early 2024, UK rents surged by 30%, according to property website Zoopla. This figure is nearly double the 17% increase in wages over the same period. In stark contrast, the decade leading up to mid-2021 saw rents climb by 26%, slightly less than the 27% increase in wages. Andrew Wishart, head of the housing service at Capital Economics, explained: “This means rents are 11% higher than would be explained by the usual relationship between pay and rent. The vast majority of that is because of higher net migration.”

Immigration has significantly increased the demand for rental properties. Based on average household size, net immigration between mid-2021 and June 2023 resulted in an additional 430,000 households seeking rental accommodation. This demand surge is roughly triple the average increase due to immigration in the preceding decade, which added around 150,000 new renting households every two years. With 4.9 million privately rented households in the UK, this period saw an increase in rental demand by nearly 9% due to immigration alone.

Richard Donnell, the executive director of Zoopla, attributes the UK’s rent crisis to the surge in net migration. He explained to the Telegraph that renting is the “first port of call” for most new arrivals, intensifying the demand for rental properties and driving up rents. Furthermore, many landlords are exiting the rental market due to tax changes and regulatory reforms, exacerbating the shortage of available rental homes.

In the two years to June 2023, nearly 1.3 million people immigrated to the UK, primarily from outside the EU. Donnell highlighted a “triple whammy on the demand side,” including high numbers of international students and a strong job market attracting more people to rental accommodation. ONS data shows that 263,000 international students arrived in the UK in the year to June, mainly from India and China, often spilling over into the private rental sector due to insufficient purpose-built student accommodation.

The average rent in the UK increased by a record 8.4% in the year to October 2023, with the average monthly rent reaching £1,029. This rapid rise has worsened affordability issues for many renters, particularly in London and the South East, leading to increased homelessness and financial strain for many households.

The cost of housing asylum seekers on the Bibby Stockholm barge has sparked controversy, as it exceeds the expense of renting properties in some of the UK’s most affluent areas. An analysis of National Audit Office (NAO) and freedom of information data reveals that the barge, moored in Portland Harbour, Dorset, costs taxpayers £6,000 per migrant each month. In contrast, renting a three-bedroom maisonette with sea views in Sandbanks, a millionaire’s resort, would cost £2,850 per month, equating to £950 per person if shared among three individuals.

The NAO’s figures indicate that the cost of acquiring, leasing, setting up, and running the 430-capacity barge will total £34.8 million for 2023/24 and 2024/25, translating to nearly £4,500 per month per head. As of the end of January, only 321 asylum seekers were on board, increasing the per-head cost to £6,022 per month.

Critics argue that the barge’s costs, coupled with additional expenses for local services, render the scheme financially impractical. Kate Robson from the No to the Barge campaign group said: “Mooring the Bibby Stockholm at Portland Port has probably been the most divisive decision ever made within Weymouth and Portland. It serves no purpose and has failed to hit any of its objectives. It is not more cost-effective.”

The Government maintains that the barge is a temporary measure to reduce the £6 million daily cost of housing migrants in hotels. But the NAO report suggests that housing migrants on barges and in former military bases is significantly more expensive than hotel accommodation. Local residents have also raised concerns about the long-term presence of the barge, with recent job adverts suggesting it may remain until at least December 2025.

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